BNZ Research

NZD Corporate FX Update

The NZD experienced a strong turnaround from late November, with only a brief interruption in late December and early January, before resuming its upward trend to reach a six-month high above 0.60. This rally has been driven by both global and domestic factors.

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New Zealand at a Glance

Not that long ago the big question was could New Zealand gain economic momentum in 2026? Nearly every indicator that we currently look at provides confirmation that the recovery is underway. Moreover, there is every reason to assume it can be sustained. The bigger question now is how fast it can grow before current spare capacity is eroded and inflationary pressures climb enough that a tightening cycle is kicked off. We think there’s water to go under the bridge for a few months yet but by year’s end rates will be on a clear uptrend.

BNZ & SEEK Employment Report: Bending upwards

Job ads continued to trend higher in January. Combined with the upward revision to December, it is encouraging to see consecutive months of improvement in the number of roles advertised on SEEK. Total ads for the last three months (Nov – Jan) are up 4.4% on the previous three months (Aug- Oct).

RBNZ Holds, Plays Straight Bat

We thought the RBNZ would hold its cash rate at 2.25% today, remove the previously projected possibility of easing further, and take a cautious approach to projected rate hikes down the track, but still modestly strengthen that outlook. That is exactly what the Bank delivered today.

Annual inflation to ease, but how fast?

Selected prices for January were close to our expectations on net. Being the first month of the quarter, they provide our first clear insight into Q1 CPI. Working through the unders and the overs, there was nothing in today’s data to alter our +0.5% q/q and +2.7% y/y pick for Q1 CPI. They support our view that headline annual inflation will ease in Q1 following the lift to 3.1% in Q4.

Momentum maintained

The services sector in New Zealand remained in expansion for the first month of 2026, according to the BNZ – BusinessNZ Performance of Services Index (PSI). The PSI for January was 50.9 (A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining). This was 0.8 points lower than December and below the average of 52.8 over the history of the survey.

BusinessNZ's CEO, Katherine Rich said that despite the January result showing a lower level of activity than December, at least the sector remains on the right side of the ledger after such a lengthy period of contraction. Two of the five sub-index values were in expansion for January, with Activity/Sales (54.2) leading the way, followed by New Orders/Business (51.8). Stocks/Inventories (49.7) fell back into contraction, while Employment (49.1) dropped further compared to December.

The proportion of negative comments for January was 58.7%, which was up from December (50.4%) and November (52.9%). Negative comments received showed the services sector still reporting low confidence, with Christmas–New Year holidays and seasonal shutdowns leading to fewer enquiries and a prolonged post-holiday slowdown. These effects were compounded by high living and operating costs.

BNZ's Senior Economist Doug Steel said that "the big question to end 2025 was whether the economy may be turning. Data since then has given us confidence that recent positive momentum can be sustained. The economy is growing".

Healthy expansion continues

January's activity for New Zealand’s manufacturing sector again showed a healthy level of expansion, according to the latest BNZ – BusinessNZ Performance of Manufacturing Index (PMI).

The seasonally adjusted PMI for January was 55.2 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). Although this was 0.9 points lower than December, it was still above the average of 52.5 since the survey began.

BusinessNZ’s Director of Advocacy, Catherine Beard, said that the January result starts the year in the right direction after a lacklustre 2025.

"All five sub-index values were again in expansion during January. This was led by the two key indices of production (56.6) and New Orders (56.4), followed by Deliveries (53.3). Employment (52.9) recorded its third straight monthly expansion, which had last occurred in the first few months of 2025.

Despite the PMI remaining in expansion during January, the proportion of positive comments from respondents stood at 47.7% for January, down from 57.1% in December and 54.4% in November. A number of manufacturers reported weak demand, citing Christmas and summer holiday shutdowns disrupting production, skewing orders, and extending the seasonal shutdown into the new year.

BNZ’s Senior Economist Doug Steel said that "the January PMI provides further evidence that the economy has finally turned the corner. It is consistent with our forecasts and a breadth of indicators suggesting decent economic growth".

Labour market lags economic cycle

The themes of today’s mass of labour market data were much as we outlined in our preview. First, it is too early to see major changes in the labour market as it tends to lag the economic cycle. Second, there are more signs of improvement in the details. Within a decimal point or two the headline figures broadly confirmed our priors.

Inflation worryingly high

The chances of a 2026 rate hike rose significantly today with annual CPI inflation rising to an eighteen month high of 3.1%. We think our new laser-focussed-on-inflation RBNZ Governor will not be amused.

Lull in the upswing?

The upswing in SEEK job ads saw a hint of stalling into the end of 2025. After 13 consecutive monthly gains on a trend basis, job ads eased 0.3% in December. This unwound November’s gain. Latest trend estimates can get revised, so interpretation requires some caution. But the hint of a flattening trend at a still relatively low level is important to monitor. If it were to continue, it would raise downside risks to forecasts of employment growth ahead.

Expansion

The services sector in New Zealand experienced expansion for the first time since February 2024, according to the BNZ – BusinessNZ Performance of Services Index (PSI).

The PSI for December was 51.5 (A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining). This was 4.3 points higher than November, but still below the average of 52.8 over the history of the survey.

BusinessNZ's CEO, Katherine Rich said that the December result ended the longest run of contraction for the sector since the survey began, stretching to 21 months. Three of the five sub-index values were in expansion, with kew Orders/Business (52.5) leading the way after four months of consecutive contraction. This was followed by Activity/Sales (52.2) and Stocks/Inventories (51.9). Despite the return to overall expansion, Employment (49.6) still remained in slight contraction.

The proportion of negative comments for December stood at 50.4%, but this was still below November (52.9%) and October (54.1%). Negative comments received showed the services sector constrained by weak demand and confidence, high living and operating costs and Christmas-related shutdowns. On the flip side, positive comments saw the services sector supported by seasonal Christmas and summer demand, improving consumer confidence driven by lower interest rates, stronger tourism, new contracts and bookings, and early signs of broader economic recovery and investment activity.

BNZ's Senior Economist Doug Steel said that "the PSI is not strong, but the positive direction of travel is important to acknowledge. Especially when the PSI is joined with the large jump in last week’s PMI, the combined index (PCI) signals firmly positive GDP growth into the end of 2025 and establishes forward momentum heading into the New Year".

Another quarter of 3% annual inflation?

A couple of the headlines from today’s selected prices looked benign enough on the inflation front, but they were more than offset by chunky gains in some of the details. The key takeaway is that today’s figures support our view that next Friday’s Q4 CPI is likely to print above the RBNZ’s November MPS forecasts.

Manufacturing ends year on high

December's activity for New Zealand’s manufacturing sector showed its highest level of activity since December 2021, according to the latest BNZ –BusinessNZ Performance of Manufacturing Index (PMI).

The seasonally adjusted PMI for December was 56.1 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). This was 4.4 points higher than November, and above the average of 52.5 since the survey began.

BusinessNZ’s Director of Advocacy, Catherine Beard, said that the December result was a very welcome way to end the year, with 8 of the 12 months showing some level of expansion.

"All five sub-index values were in expansion during December. This was led by kew Orders (59.8), which was at its highest level of activity since July 2021. Production (57.4) also showed a significant lift in activity, while Employment (53.8) continued to recover after a number of months exhibiting declines during 2025.

The proportion of positive comments from respondents stood at 57.1% for December, which was up from 54.4% for November and 45.9% in October. Manufacturers saw improved activity, mainly due to seasonal Christmas demand, which lifted domestic sales, orders, and short-term workloads. This was supported by firmer business and consumer confidence, increased export and forward orders, and some gains from new customers, products, and infrastructure-related work.

BNZ’s Senior Economist Doug Steel said that "the PMI is positive for Q4 GDP calculations and points to good momentum heading into the New Year. At face value, it suggests upside risk to the positive view we already have for manufacturing and near-term GDP growth forecasts".

QSBO Indicates Strengthening Economy

We are moderately, and happily, surprised by the strength revealed in NZIER’s December Quarterly Survey of Business Opinion. At face value it shows that momentum in New Zealand’s economic recovery is gaining a real head of steam and, accompanying that, inflationary pressures are already building in a meaningful way.

GDP volatility reigns

Today’s GDP outturn delivered what it promised, namely more noise than signal.

Over the last five quarters, starting Q3 2024, the economy has allegedly plummeted 1.3%, stalled at 0.1%, soared 1.1%, crashed 1.0% and soared again in Q3 2025 this time by 1.1%. Does anyone feel this is a true reflection of what happened to them? And do we really think we are currently growing at the same pace as China (1.1% for Q3) and three times that of Australia (0.4% for the quarter)?

Deficit narrowing continues, for now

The current account deficit narrowed to 3.5% of GDP in the year to September 2025. It was a tick wider than our forecast of 3.4%, but smaller than the 3.7% annual deficit recorded in June and extends a material narrowing over the past three years.

Fiscal surplus still a distant dream

Key numbers

The core fiscal deficit (OBEGALx) is forecast to rise to a six year high of 3.0% of GDP in the June year 2026.

It is forecast to decline steadily the following three years before returning to a 0.4% of GDP surplus in Fiscal 2030.

Net debt rises from 41.8% of GDP in the year ended June 2025 to a peak of 46.9% in Fiscal 2028. It edges lower to 46.1% of GDP in Fiscal 2030.

The economy is forecast to grow 2.0% in the year ended June 2026 and then bounce 3.5% the year after. Growth is expected to average 2.6% per annum in the three years thereafter.

Familiar themes in monthly inflation indicators

Our main interest in today’s November Selected Prices was if they had any material influence of our thoughts for near term CPI. In short, they didn’t.

There were some unders and overs in the details, but overall, the monthly indicators were in line with our expectations.

Dare to believe?

SEEK job ads continue to show positive signs, trending upwards off a low base. It is encouraging to see five consecutive months of improvement (seasonally adjusted). Job ads for the last three months (Sep – Nov) are now up 3.9% on the previous three months (Jun – Aug).

Same Story

The services sector in New Zealand dipped further into contraction during November, according to the BNZ – BusinessNZ Performance of Services Index (PSI).

The PSI for November was 46.9 (A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining). This was 1.5 points lower than October, and the lowest level of activity since May 2025. The November result was also still well below the average of 52.8 over the history of the survey.

BusinessNZ's CEO, Katherine Rich said that the November result put to bed any immediate hope that the sector was heading somewhere towards expansion. All five sub-index values were in contraction, with Activity/Sales (45.8) experiencing the greatest level of contraction for the current month. While New Orders/Business (49.3) still hovered just below the no change mark, Employment (46.4) also took a dip from October.

Despite a stronger level of contraction during November, the proportion of negative comments for November (52.9%) was lower than October (54.1%) and September (58.0%). Negative comments received show the services sector overwhelmingly citing the weak economic environment, including low consumer confidence, high living costs, inflation, interest rates, and reduced spending, as the main factors affecting recent activity.

BNZ's Senior Economist Doug Steel said that "combined with the Performance of Manufacturing Index (PMI), the composite activity indicator poses downside risk to even modest growth expectations for early next year".

Continued Gains

New Zealand’s manufacturing sector showed further expansion during November, according to the latest BNZ – BusinessNZ Performance of Manufacturing Index (PMI).

The seasonally adjusted PMI for November was 51.4 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). This was 0.2 points higher than October, but still below the average of 52.4 since the survey began.

BusinessNZ’s Director of Advocacy, Catherine Beard, said that in the current economic climate, any move that sees activity both positive and higher than the previous month is a welcome step.

"Four of the five sub-index values were in expansion during November, lead by production (52.8). Employment (52.4) was in positive territory for the first time since April 2025, while New Orders (51.9) remained in expansion, albeit down from last month. In contrast, Deliveries (49.0) fell into contraction for the first time since June 2025.

The proportion of negative comments from respondents stood at 45.6% for November, down from 54.1% in October and 60.2% in September.

Manufacturers reported a lift in demand driven by seasonal Christmas activity, improving economic conditions and rising customer confidence. Increased orders, both domestic and overseas, along with stronger construction activity, new customers, and product launches contributed to a more positive outlook.

BNZ’s Senior Economist Doug Steel said that "the PMI has seemingly settled above the breakeven 50 mark. Nonetheless, we want to see more upbeat outturns from this survey and the Performance of Services Index (due Monday), to provide us with some comfort that the expected lift in Q3 GDP can be sustained into Q4".

GDP to show decent bounce

We have been warning of upside risk to Q3 GDP calculations for some time. Today’s business financial and energy data firmly add to that idea. Q3 GDP data is release next Thursday, 18 December.

Our estimate for Q3 GDP growth has been lifted to 0.9% q/q (from 0.6%) after trawling through today’s manufacturing, wholesale trade, energy, and services data.

A sharp recovery for the NZD

• The NZD and AUD enjoyed very strong gains from mid-Jan as the USD collapsed and a global reflationary thematic prevailed
• Investors’ loss of trust in US policy exaggerated market movements alongside the end of the rules-based international order
• Global equity markets stretch to fresh highs; US Treasuries range-bound; NZ-global rate spreads increase

An uneventful close to 2025

• Market price action over the first three weeks of December was modest, with a lack of key drivers to perturb investors
• The bias to global rates was to the upside on a view of maturing rate cutting cycles
• The USD was broadly weaker; NZD/USD showed a small gain and NZD cross movements were also small

November a net nothingburger

• Markets were well contained in November, with little net change across global equities, rates and currencies
• The NZD hit fresh lows during the month, before recovering after a more hawkish RBNZ policy update than widely expected
• Higher conviction on the end of easing cycles saw both NZ and Australian rates higher, against the global trend

Outlook for Borrowers: Post February MPS

The Reserve Bank of New Zealand (RBNZ) held the Official Cash Rate (OCR) steady at 2.25% at the Monetary Policy Statement (MPS) on Wednesday. This outcome was expected by economists and fully reflected in market pricing. The decision was reached by consensus. The updated modelled OCR track has a low point of 2.25% removing the marginal easing bias from November. The December quarter average was increased by 10bp to 2.38%, implying a greater chance of a rate hike towards the end of this year. The projected track for next year was also revised higher and the OCR reaches the Bank’s 3% long term neutral estimate by late 2028.

Post-HYEFU NZGB Supply Update

New Zealand Debt Management (NZDM) updated the bond programme today, alongside the Half Year Economic and Fiscal Update (HYEFU). Gross NZ Government Bond (NZGB) issuance has been increased by a total of NZ$3 billion over the forecast period to June 2029, compared with the Budget Economic and Fiscal Update (BEFU) in May. The 2029/30 year has been added, and gross issuance for that year is forecast to be NZ$30 billion.

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Rapid recovery for retail

We were looking for today’s Q4 retail trade data to show a modest gain and add evidence of the economic recovery. The 0.9% q/q lift in retail sales volumes did this and more. On the back of the strength in today’s data, we have nudged up our Q4 GDP pick one tenth to 0.6% q/q. Business and consumer confidence surveys are due later this week.

RBNZ Seen On Hold This Week

The RBNZ is expected to hold the cash rate at 2.25% at Wednesday’s MPS. Assuming the unanimously expected outcome occurs, focus will quickly turn to the Bank’s language and forward projections. We expect the possibility of easing to be removed from the Bank’s published interest rate track, such that the low remains at 2.25% through to the December quarter. From there on in we would expect the track to be around 10 basis points higher than previously published. Growth indicators have been generally positive, including the PMI and PSI, although today’s transactions data disappointed. Inflation expectations have nudged higher. Tomorrow’s Selected Prices will give some guidance to Q1 CPI.

RBNZ Monetary Policy Preview

We believe the RBNZ will have to raise its cash rate in September of this year but, given the uncertainties that prevail, we do not expect it to express that intent when it releases its February 18 Monetary Policy Statement. We expect the possibility of an easing to be removed from the Bank’s published interest rate track such that the low remains at 2.25% through to the December quarter. From there on in we would expect the track to be around 10 basis points higher than previously published. Higher than expected growth and inflation are likely to be acknowledged but there is likely to be some push back on current market pricing.

Labour Market Preview: Too Soon?

Wednesday’s Q4 labour market data is forecast to show the first quarterly employment growth in 18 months and a halting in the drift higher in the unemployment rate. Annual wage disinflation is seen nearing an end, as improving labour demand meets some difficulty in being satisfied. Commodity price updates and December building consents data are also due.

Forging ahead

Our view of the world can be summed up in three sentences:
• Growth is picking up toward potential
• This will eventually result in an improvement in labour market conditions
• Which, in turn, will see upward pressure on inflation and the cash rate move back toward neutral with reasonable haste once the need is confirmed.

Optimism to kick off the New Year

Resumed data flow over the last week suggests that New Zealand ended 2025 on a more optimistic note. Combining the messages of the QSBO, PMI and PSI reports, we see upside risk to our near-term growth projections. For the week ahead, the main data focus will be Friday’s Q4 CPI. Headline inflation is expected to print at 0.4% q/q and 2.9% y/y, a couple of ticks higher than the RBNZ’s November MPS forecast.

Happy New Year?

We head into a brand-new year quietly confident it will prove to be a much better one than any of the past three years. We say this mindful that we did not share the consensus view that calendar 2025 would prove to be filled with optimism. But we are quick to point out that “better” and “good” are two very different things. While we expect economic expansion in every quarter of the year, we are still very aware that conditions will remain tough for many. Both households and businesses will continue to struggle with elevated costs, and the household sector is unlikely to see much joy on the job front until much later in the year.

The Pre-Christmas Blockbuster

It is the usual massive pre-Christmas rush of economic information this week. Q3 GDP is expected to show a decent lift but is likely to overstate trend improvement. PMI/PSI reveal still challenging conditions for many. The Government’s HYEFU to show a long road back to surplus. Annual current account deficit still seen narrowing, for now. Selected Prices to inform our thoughts for Q4 CPI.

Welcome Dr Anna Breman!

Dr Anna Breman, the new RBNZ Governor, made an impressive debut before the Finance and Expenditure Committee last week. Governor Breman has hit the ground running. Falling dairy prices need to be watched closely, as downside risk accumulates. GDP partials this week expected to support forecast Q3 bounce. PMI, migration, and tourism data are also due.

More Signs of Economic Recovery

Some MPC members have noted they are not surprised at the market reaction to last week’s MPS. That is important because it suggests the Bank is comfortable with the market direction. New RBNZ Governor Dr Anna Breman starts today. There are more signs of economic recovery. We nudge our Q3 GDP pick up to 0.6% q/q awaiting more ‘partials’ over this week and next. Dairy prices are under downward pressure.

BNZ Markets Today

There has been a mild risk-off vibe in overnight trading, with US equities falling and Treasuries well-bid. Rotation out of tech stocks has continued, while oil prices are higher as US-Iran nuclear talks reach a pivotal moment. The USD is broadly stronger overnight and the NZD has fallen to 0.5960.

BNZ Markets Today

Risk sentiment remains buoyant, driving further gains across global equities ahead of Nvidia’s results due after the US close. The S&P 500 is up more than 0.5% in afternoon trade, while European and Asian markets are also well supported. The Euro Stoxx has pushed to a fresh record high and the Nikkei closed over 2% higher. Sovereign bond and FX markets were little changed.

BNZ Markets Today

US equities have recovered some of yesterday’s losses, supported by a renewed rotation into IT stocks. Global rates have shown only minor movements. In currency markets, activity has been modest, except for a notable decline in the yen. The NZD is trading at 0.5970.

BNZ Markets Today

Risk sentiment is weaker as markets further digest the implications of the latest saga on Trump’s tariff policy. US equities have fallen around 1% and US Treasury yields are lower. Safe haven CHF and JPY currencies have outperformed, while commodity currencies are weaker.

BNZ Markets Today

The US Supreme Court has found President Trump exceeded his powers by imposing tariffs without clear Congressional authorization. The news contributed to a 0.7% gain for the S&P on the prospect of relief from tariffs. Treasury yields edged higher and the US dollar lost ground. The recent advance in oil prices stalled near a six-month high after The Wall Street Journal reported Trump is weighing a targeted strike on military or government sites in Iran to pressure Tehran into a deal, rather than a full-scale attack. The Euro Stoxx closed at a record high. European stocks are headed for the largest ever monthly inflow in February.

BNZ Markets Today

Rising geopolitical risk linked to US–Iran tensions weighed on global equities. The S&P slipped into negative territory in afternoon trade and is currently down close to 0.5%. Major European indices also retraced, with the Euro Stoxx closing around 1% lower. In contrast, sovereign bond and currency markets were little changed.

BNZ Markets Today

US equities, rates and the USD are all higher overnight, supported by stronger than expected second-tier US economic data, with markets, other than oil, showing little concern that war between US and Iran might be closer than realised, despite some progress earlier this week on nuclear talks. The NZD has sustained the fall seen in the wake of yesterday’s RBNZ’s policy update and is trading just below 0.60.

BNZ Markets Today

Market conditions have been somewhat choppy overnight. US equities are flat in early afternoon trading, recovering from earlier falls. The US 10-year rate is slightly higher after taking a peek below 4.02 overnight. Oil prices are lower after earlier gains, following tentative agreement on principles towards a US-Iran nuclear deal. The NZD is net flat, while GBP is the weakest of the majors following softer labour market data.

BNZ Markets Today

It has been a very quiet start to the week with many markets closed, including the US for Presidents’ Day and some key Asian markets due to the Lunar New Year holidays. Newsflow has been light.

BNZ Markets Today

US equities were little changed into the weekly close, stabilizing after the previous session's AI-driven selloff. Stocks gained initially after softer-than-expected CPI data which saw the market price in additional easing by the Federal Reserve for this year. However earlier gains for US stocks had faded by the close. Major indices in Europe were mixed while Asian equities closed lower. Treasury yields declined and the US dollar was marginally softer against G10 currencies although absolute moves were not large.

BNZ Markets Today

Newsflow has been light but risk appetite is weaker, and US equities are much lower, dragged down by lingering concerns in the IT sector. Currency movements have been modest but CHF has been the best performer overnight, while NZD/USD has pushed lower.

BNZ Markets Today

A much stronger than expected US employment report drove the US Treasuries curve flatter while US equities show a small gain. NZD/USD is little changed at 0.6060 while NZD/AUD falls below 0.85 as AUD rises to a three-year high above 0.71.

BNZ Markets Today

US equities are little changed. The S&P is consolidating just below record highs having fully recovered from the technology sector led weakness from last week. Softer than expected US retail sales supported the case for Fed rate cuts which contributed to a decline in treasury yields and a stronger yen. Global equities were mixed. Major European closed marginally lower while the Nikkei continued its post-election advance and gained a further 2%. The index closed at a fresh record high and is up 15% so far this year.

BNZ Markets Today

Newsflow overnight has been light. US equities have recovered further, driven by IT stocks. The US 10-year rate is little changed after a couple of unsuccessful attempts to sustain a push higher. The USD is broadly weaker, resulting in NZD pushing up to 0.6050.

BNZ Markets Today

US equity markets recovered late last week after several soft sessions. The Nasdaq Composite advanced close to 2%, partially reversing a 4.5% three day decline. Earlier weakness reflected investor concern about AI related disruption and the scale of tech sector capex, with four major technology firms projecting around US$650 billion of spending in 2026, mostly on data centre infrastructure. The US dollar declined against G10 currencies and treasury yields firmed.

BNZ Markets Today

US equity markets were mixed, with a continued rotation out of technology stocks. The S&P500 was little changed, while the Nasdaq extended its decline amid ongoing concerns about AI related disruption across software and data centric sectors. Sovereign bond markets were broadly stable, with US Treasury yields steady and yields declining modestly in Europe. The US dollar index edged higher. In commodities, metals prices remained volatile; gold briefly traded near USD 5,100 per ounce before retracing sharply.

BNZ Markets Today

There has been little news to digest overnight. A slump in tech stocks has dragged down the S&P500 while US Treasury yields have traded a tight range. Gold and silver prices have bounced strongly, while the USD is modestly weaker. The AUD has held onto its gain post the RBA rate hike yesterday while the NZD has pushed higher and trades this morning around 0.6040.

BNZ Markets Today

The Asian trading session kicked off in a volatile fashion, with gold and silver prices collapsing further, S&P500 futures opened on a weak note and the NZD dived below 0.60. This followed the choppy trading session on Friday following Trump’s pick of Kevin Warsh as the next Fed Chair.

BNZ Markets Today

The focus for markets late last week was President Trump’s decision to nominate Kevin Warsh as the next Chair of the Federal Reserve. Warsh, a former Fed Governor, will succeed Jay Powell when Powell’s term ends in May, subject to Senate approval. Warsh is seen as less supportive of deep rate cuts and more concerned about inflation than other candidates. The US dollar advanced, equities closed lower, and longer term Treasury yields were mixed. Volatility in precious metals continued, with gold prices falling below US$4,800/oz—a decline of nearly 15% relative to the previous session’s high.

BNZ Markets Today

There was a risk-off tone across global equity markets led by US technology stocks. Microsoft reported higher-than-expected spending on AI infrastructure, reigniting investor concerns about the vast capital expenditure by large US technology companies. The S&P is down 1% in afternoon trading having rebounded from a larger decline. News of a potential de-escalation in the Ukraine conflict contributed to the recovery off the session lows. There were limited moves for government bond markets while the US dollar is broadly firmer against G10 currencies. The AUD and NZD had large swings and traded in a wide range.

BNZ Markets Today

Ahead of the Fed’s policy update this morning, net market movements have been contained. An early rally in US equities faded and the US 10-year rate remain tightly range-bound. JPY and EUR are weaker overnight while the NZD has been steady in the low 0.60s.

BNZ Markets Today

US equities managed to look past a decline in consumer confidence and gained alongside global indices. The S&P is close to 0.5% higher in afternoon trading, with the index only marginally below the record high, set earlier in the month. The US dollar remained under pressure, and made broad based losses against G10 currencies, with the dollar index falling to a four-year low. US treasuries were little changed overall. Brent crude prices traded above US$67 on geopolitical concerns with a growing US military presence near Iran.

BNZ Markets Today

The new week kicked off with a stronger yen as the chance of official intervention overhung the market. The USD remained under pressure and the DXY index fell to a four-month low. The NZD recovered further towards 0.60. Global equity markets are stronger, while the US 10-year rate remain tightly range-bound.

BNZ Markets Today

Friday’s price action was a case of not much to see in equities and bond markets, but notable moves in commodities and currencies. Precious metals rose to fresh record highs and oil prices jumped over 3%. The USD was broadly weaker again, supporting further NZD appreciation to 0.5950, while JPY was the strongest major after some official price checks in response to yen weakness post the BoJ meeting.

BNZ Markets Today

Risk appetite improved after Trump announced a framework for a future deal on Greenland, resulting in stronger global equity markets, and the NZD and AUD outperforming. Gains have been extended overnight in the face of a broadly weaker USD, seeing the NZD pierce up through 0.59.

BNZ Markets Today

President Trump is again at the centre of market attention and his ruling out of force to acquire Greenland drove a bounce-back in global equity markets. There has been less impact on bonds and currency markets, with modest reactions. The US 10-year rate is little changed. The NZD weakened a little after making fresh highs overnight.

BNZ Markets Today

The fallout from rising US-EU political relations over the future of Greenland continues to reverberate through markets, with a meltdown in Japan’s bond market thrown into the mix. Global equity markets are weaker, global rates are higher, and the USD is broadly weaker. The NZD has become a safe-haven (lol), appreciating further to 0.5850 and up on most key crosses.

BNZ Markets Today

As markets opened for the new week there was keen interest in the response to President Trump’s weekend threat of new tariffs on eight European countries to persuade them to give up Greenland, alongside chatter that French President Macron was urging the EU to activate the powerful anti-coercion instrument, seen as a bazooka to hit US trade and investment into the region.

BNZ Markets Today

Risk sensitive assets were little changed into the weekly close. US equities ended the session with flat returns and global indices also registered small moves. Investor sentiment has remained upbeat with global equities consolidating near record highs and strong demand for credit amid record issuance in the first half of January. Treasury yields increased and the US dollar recovered off the session lows, after comments from President Trump appeared to decrease the chances of Kevin Hassett becoming the next Federal Reserve Chair, when Powell’s term expires in May.

BNZ Markets Today

US equities have rebounded from the weakness in the previous session. The S&P is up around 0.7% currently and there were decent gains for key European indices. Treasury yields increased after resilient labour market data and the US dollar gained against European currencies. Oil prices declined sharply, and precious metals also slipped from their record highs. Silver prices were volatile and declined close to 7% intraday before recovering.

BNZ Markets Today

US equities have fallen amid rising geopolitical tensions while metals prices have continued to advance. The S&P is down close to 1% in afternoon trading with limited impact from US retail sales and PPI data. The Nikkei extended its recent gains. It was reported that plans for a snap general election in February have been outlined to senior colleagues by Japan’s Prime Minister Takaichi. Metals including gold, silver, copper, and tin have hit record highs as investors seek alternatives to traditional assets. Global government bond market yields are broadly lower, and the US dollar index declined at the margin.

BNZ Markets Today

Global asset markets are broadly stable overnight. US core CPI undershot expectations but had limited lasting impact on US rates. Investor concerns about the investigation into Federal Reserve Chair Powell appeared to abate. Central bank governors from 11 institutions, issued a statement of support for Powell and the Fed's independence, which contributed to a reversal of the US dollar’s decline from the previous session. The S&P lurched to a fresh intraday record high after the CPI data but has since retraced. The potential for a snap election in Japan saw the Nikkei gain 3% and reach a record high while the yen and government bonds were under pressure.

BNZ Markets Today

This is the first Markets Today for 2026. We wish all our readers a Happy New Year.

US equity futures came under pressure in Asian trade yesterday after US Federal Reserve Chair Powell revealed that the Justice Department was threatening a criminal indictment over renovations of its headquarters. Powell said this was a consequence of its interest-rate policies, which raised further concerns about the central bank’s independence and the strength of US institutions more broadly, amid ongoing political pressure. The US dollar declined in response and precious metals gained on safe haven flows. Gold prices reached to a fresh record high above US$4600 per troy ounce.

BNZ Markets Today

Softer than expected US CPI data reinforced expectations for further rate cuts by the Federal Reserve and contributed to solid rally for equity markets. The S&P is more than 1% higher in afternoon trading with larger gains for the Nasdaq. Global government bond yields are broadly lower while the US dollar is little changed against the major FX pairings.

BNZ Markets Today

US equities are notably weaker, dragged down by the tech sector, but there has been limited movement in US Treasuries and currencies. The NZD has traded in a narrow range. Oil prices have recovered moderately from yesterday’s low after Trump’s blockade of sanctioned Venezuelan oil tankers.

BNZ Markets Today

Following the mass of data releases overnight the net result has been not a lot of market price action, although the direction of travel has been slightly lower US rates, a slightly weaker USD and modestly weaker US equities. Oil prices continue to head south, with WTI crude down to its lowest level in over four years. The NZD continues to linger just under the 0.58 mark.

BNZ Markets Today

Ahead of a busy week before Christmas, including the key US employment report tonight, market movements have been modest. US equities are slightly softer in early afternoon trading, global rates are flat to down slightly, and currency moves have been modest. The NZD has recovered much of the loss seen after an unexpected statement from RBNZ Governor Breman that sent interest rates lower.

BNZ Markets Today

Concerns about the outlook for artificial intelligence and technology stocks weighed on investor risk sentiment into the weekly close. A disappointing sales outlook from Broadcom fuelled investor concerns about high valuations for companies linked to the sector. The S&P fell 1% and the Nasdaq declined 1.7% while European indices also closed lower. Global government bond market yields increased and the US dollar was broadly stable against G10 currencies.

BNZ Markets Today

The rally in US equities after the Federal Reserve’s interest-rate cut has lost momentum following disappointing results from Oracle which weighed on technology shares. The Nasdaq has fallen close to 1% in afternoon trading and the S&P is also in negative territory. However, The Dow industrials index has bucked the trend, rising nearly 1% and hitting an intraday record above 48500. US treasury yields are modestly lower, and the US dollar has extended its post-FOMC decline. Copper prices reached a fresh record high and other industrial metals gained. Copper has rallied almost 35% this year with supply constrained by a series of mine disruptions.

BNZ Markets Today

Market movements have been modest in the lead-up to the US Fed’s policy announcement due at 8am NZ time. Heading into the meeting, US equities are flat, US Treasury yields are trading at the bottom of their range for the day, and the USD is broadly weaker, although moves haven’t been significant.

BNZ Markets Today

Market movements have been modest, with US equities slightly higher and little change in the US 10-year rate since the NZ close. Australian rates and the AUD increased after the RBA opened the door to tightening policy from early next year. NZD/AUD has nudged lower but NZD/USD traded at a fresh six-week high just under 0.58, while the yen continues to underperform.

BNZ Markets Today

Global rates are higher overnight, led by Europe after some hawkish commentary from the ECB’s Schnabel. Higher rates have dampened spirits for equity investors, with the S&P500 down 0.4% in early afternoon trading after meeting some resistance near October’s record high. The NZD is currently at 0.5775, after trading at a fresh six-week high overnight.

BNZ Markets Today

Net moves across risk sensitive assets were modest into the weekly close. The S&P traded up towards the late October record high above 6900 before paring its gains to end the session only marginally in positive territory. There was limited market reaction to the delayed release of the September PCE report. Global sovereign bond yields closed higher in yield, and the US dollar was stable against G10 currencies, except for the Canadian dollar, which gained after strong labour market data.

BNZ Markets Today

Market movements continue to show only modest changes in the absence of a fresh narrative to drive big moves. US equities show little net change and global rates are mostly higher. Net currency moves have been modest and the NZD is flat, hovering around 0.5775.

BNZ Markets Today

A soft ADP employment print solidified market expectations for a Fed rate cut next week, but the net move in US Treasuries overnight has been small. US equities show a small gain. The USD continues its weaker run and the NZD has pushed up to monthly highs just over 0.5770.

BNZ Markets Today

Markets movements have been modest across equities, rates and currencies.

As US markets opened overnight, risk appetite was higher, with a strong recovery in bitcoin, which has sustained a lift of 6% to be back over USD91k. US equities opened stronger, with the more speculative areas outperforming, including IT stocks. In early afternoon trading the S&P500 is up 0.4%.

BNZ Markets Today

US equities have started the new month with a soft tone. S&P futures declined during Asian trade yesterday, amid a sharp selloff in cryptocurrencies, and the cash market is marginally lower in afternoon US trading. The US dollar slipped against major FX pairings while global bond markets are higher in yield. Oil prices gained after OPEC+ confirmed over the weekend that it will continue with plans to pause production hikes during the first quarter of next year. Silver prices extended higher and reached a fresh record above US$58 per ounce.

BNZ Markets Today

US equities made modest gains into month-end with investors having to contend with a technical issue at CME Group that disrupted futures trading including for stock indices, treasuries, gold and oil contracts. The S&P closed 0.5% higher on the day and ended a volatile month near unchanged. Little over a week ago, the index had been down close to 5%. Other global stock indices were also near flat. The US dollar was broadly stable against G10 currencies and treasury yields edged higher.

Outlook for Borrowers: Post February MPS

The Reserve Bank of New Zealand (RBNZ) held the Official Cash Rate (OCR) steady at 2.25% at the Monetary Policy Statement (MPS) on Wednesday. This outcome was expected by economists and fully reflected in market pricing. The decision was reached by consensus. The updated modelled OCR track has a low point of 2.25% removing the marginal easing bias from November. The December quarter average was increased by 10bp to 2.38%, implying a greater chance of a rate hike towards the end of this year. The projected track for next year was also revised higher and the OCR reaches the Bank’s 3% long term neutral estimate by late 2028.

Buoyant beef

Beef prices have continued to lift over recent months. This is from already high levels and against some easing that typically takes place at this time of year. Beef is buoyant.

Not only are beef prices about a third higher than a year ago, but they are also up two thirds on two years ago. It is a significant lift. From a bit below average two years ago, prices are now substantially above average.

Significant moves and building buffers

Volatility and uncertainty seem to be omnipresent with the primary sector seeming to see more than its fair share. It shows up in many forms as we have witnessed over recent seasons. Change can occur quickly.