BNZ Research

Our research team offers expert commentary on economics, foreign exchange, fixed interest and credit, to help inform your organisation’s risk analysis and decision making. 

See our team.

Publications available

Currency Research

NZD Positioning Signal Reads Overbought?

Jason Wong -
Download PDF

Each week the CFTC publishes data that provide a useful gauge on net speculative positioning in currencies and other financial market variables such as commodities and US Treasuries. We normally give the data a glance and then move on quickly. However, it piques our interest when positioning gets to extreme levels – the theory being that one-sided positioning might give a good contrarian signal for the outlook.

NZD/AUD: Reverse Swing Ahead?

Jason Wong -
Download PDF

Our last major note on the NZD/AUD cross rate was back in August last year, where we toned down our exuberance for the cross and suggested an AUD 0.91-0.95 range through to the end of 2018. That view has largely played out apart from a downside breach late last year as NZ political risk dominated pricing, but this wasn’t sustained.

NZD/CAD: Canada (Home and) Dry?

Jason Wong -
Download PDF

Last week we saw intensification of concerns over US trade actions against China and the likelihood of retaliatory measures from China against the US usurped the FOMC meeting as the key driver of market price action – in equities and FX at least. And Friday night saw higher Canada CPI inflation, with all key core measures now hovering around target at 2%. The Canadian dollar outperformed both the Australian and New Zealand dollars, with CAD proving to be the best performing G10 currency, with AUD and NZD both in the bottom four.

NZD Corporate FX Update

Jason Wong -
Download PDF

Through 2018 so far, the NZD has met some resistance around 0.7440, with weaker risk appetite recently driving the NZD back down to 0.72, in line with our end-Q1 and Q2 targets set earlier this year. Trade protectionism has reared its ugly head again, following President Trump’s imposition of import tariffs on various products including steel and aluminium. This theme is likely to continue into the second quarter, with Trump targeting a $100bn reduction in the US trade deficit with China. We have yet to see other countries retaliate, but if Trump continues down this path then some backlash seems inevitable. However, we still don’t think that a full-on global trade war is likely and we see the real economic impact of what we would call tweaks to trade policy as limited.

NZD/JPY: The Case For Further Downward Pressure

Jason Wong -
Download PDF

Earlier this year (see NZD Corporate FX Update) we turned more bullish on the yen, revising our NZD/JPY forecasts significantly lower to show a trend decline in the cross through the next few years, taking it to 68 by the end of 2020. Since then we’ve already seen a 3-4% move lower in the cross from 80 to 77, moving down at a faster pace than projected (which is not unusual when it comes to currency forecasting!). In this note we flesh out our positive yen story.

Can the NZD weaken as the USD weakens?

Jason Wong -
Download PDF

In our last major note towards the end of January “Weak USD Threatens Our NZD Call”, the USD TWI had just fallen for the seventh consecutive week, the NZD had breached the USD 0.74 mark and we wondered aloud how much longer this could continue. As it turns out, the freefall in the USD has stopped, with the currency entering a period of consolidation. This has seen the NZD held largely within a USD 0.72-0.74 trading range over recent weeks.

NZD Corporate FX Update

Jason Wong -
Download PDF

The year has begun with bearish sentiment overhanging the USD which saw the NZD push up to fresh highs above 0.74. We have recently been fretting about USD weakness and wondering how much longer this would be sustained. But currency markets are now at an interesting crossroads. A chunky increase in US Treasury yields has spooked markets. A much higher VIX index and wider credit spreads has seen our risk appetite index plunge from 85% to 70%, giving a taste of what might be in store for 2018, namely increased market volatility. A question mark hangs over whether the USD will continue to lurch downwards.

Weak USD Threatens Our NZD Call

Jason Wong -
Download PDF

In our opening currency piece for the year, “NZD Review and Outlook” we touched on a few themes including the weak USD story. We expand on this theme and the implications for the NZD.

Economy Watch

Lift In Service

Business NZ/BNZ -

New Zealand’s services sector experienced a lift in expansion levels during March, according to the BNZ - BusinessNZ Performance of Services Index (PSI).

Easing Off

BNZ - BusinessNZ -
Download PDF

New Zealand’s level of manufacturing expansion decreased further in March,
according to the BNZ - BusinessNZ Performance of Manufacturing Index (PMI).

QSBO Gets a Grip

Craig Ebert -
Download PDF

In summary, today’s QSBO was very close to what we expected. While there was potential for it to look a bit better, because it doesn’t cover farmers (who are currently gloomy in their general outlook), it also seemed prone to the negative global rhetoric around trade, along with the recent market volatility. As it turned out, business sentiment found a floor, while its activity expectations were reasonable enough to suggest maintained pressure on resources.

BNZ Economy Watch - Deliberating Dairy

Doug Steel -
Download PDF

Fonterra has lifted its milk price forecast for 2017/18 to $6.55 and so have we. This follows from generally higher international prices and a relatively stable NZD during 2018. We expect global dairy prices to drift lower in 2018, but downside risks have moderated with a higher Euro, higher oil prices, and robust dairy demand. Reflecting this, we lift our 2018/19 milk price forecast to $6.10. But with wide error bounds around any season-ahead milk price forecast, we look at some alternative scenarios.

Fed Hyperactive as RBNZ Hibernates

Stephen Toplis -
Download PDF

We still think that the cash rate will increase in advance of the RBNZ’s expectations but there was nothing in today’s OCR review to suggest that the Bank is moving in that direction.

When No Inflation Is Good Inflation

Stephen Toplis -
Download PDF

Ultimately inflation targeting is an intermediate objective. The ultimate role of monetary policy is to assist in creating an environment which maximizes the long term well-being of a country’s citizens. Removing, rather than creating, economic distortions must surely be a means to achieving this outcome. With this in mind we are hopeful that the new incoming Governor will take a more pragmatic stance to central banking than his predecessor and, in particular, be more openly aware of the ultimate goals of monetary policy rather than inflation targeting simply for inflation targeting’s sake.

US FOMC Preview – Data Supports a Hawkish Fed

Tapas Strickland, Gavin Friend -

US FOMC Preview – Data Supports a Hawkish Fed

Mixed Results

Craig Ebert -

New Zealand’s services sector experienced a slight slip in expansion levels during February, according to the BNZ - BusinessNZ Performance of Services Index (PSI).

On Average

BNZ - Business NZ -
Download PDF

New Zealand’s level of manufacturing expansion decreased slightly in February, according to the BNZ - BusinessNZ Performance of Manufacturing Index (PMI).

NZ Growth Dip Of Little Concern

Stephen Toplis -
Download PDF

The New Zealand economy grew 0.6% through the fourth quarter of 2017. Compared with year earlier levels activity was up 2.9%. The quarterly outturn was modestly below expectations and resulted in a 30 pip fall in the NZD. In our opinion, the market response was probably unwarranted as: the data are very dated; the outcome was only 0.1% below that of the RBNZ’s expectations; and the figures are highly unlikely to result in any significant shift in forecasters’ views of the future.

Starting To Widen

Doug Steel -
Download PDF

New Zealand’s external accounts remain off the market’s radar. One reason is a relatively small current account deficit. Another is a shrinking net external liability ratio. We expect the current account deficit to widen ahead, but remain contained by historical standards.

A Toast to a Half-Filled Tumbler

Craig Ebert -
Download PDF

If New Zealand’s business glass appeared drained after the news of the new government, it has arguably just been topped up to half full. At one level, today’s ANZ business outlook survey was encouraging. Its net confidence reading, in particular, rebounded to -19, from its prior result, of -38, back in December. At another level, however, it obviously remains clearly below par, and thus well south of where it was riding, going into September’s election.

Retail Ripper

Doug Steel -
Download PDF

The tills were ringing loudly in the final quarter of last year. Of course, they always do in the Christmas quarter but it was more than usual this time around.

On Track

Business NZ/BNZ -

New Zealand’s services sector started 2018 with a healthy level of expansion, according to the BNZ - BusinessNZ Performance of Services Index (PSI).

RBNZ Maintains Tightening Bias

Stephen Toplis -
Download PDF

We see no need to change our view that the RBNZ starts raising interest rates in February 2019 and then it moves relatively aggressively. However, we equally concede that there are multiple risks around our hypothesis. In addition to economic developments, we will have a new RBNZ Governor for the next Monetary Policy Statement and, potentially, a very different Policy Targets Agreement.

Labour Market Keeps Promise of Stronger Wage Inflation

Craig Ebert -
Download PDF

While today’s labour market data were not entirely strong, they add to the impression that New Zealand’s labour market is tight and tightening further. But also that, for the meantime, inflation in wage rates remains moderate.

Seeing Through the CPI’s New Clothes

Craig Ebert -
Download PDF

Sure, the RBNZ, in its November Monetary Policy Statement (MPS), was looking for 1.8%, and, more to the point, a slowdown to just 1.5% for Q1 2018. However, it also forecast annual CPI inflation to pop back up to 2.1% in Q2 2018 (and to stay around the middle of the 1.0 to 3.0% target band over the remainder of the forecast horizon). Today’s CPI outturn undermines this profile, at least for the foreseeable future.

Financial Markets Wrap

NZD Flat in March

Jason Wong -
Download PDF

• Global equity markets weak and volatile
• But little spillover for currency markets; NZD/USD and NZ TWI flat
• Safe-haven flows see global rates lower; NZ-US yield compression continues

Bearish USD Sentiment Drives NZD Higher

Jason Wong -
Download PDF

The key theme that pervaded markets in January was a very weak USD, following up on its poor performance through 2017. Key USD indices were down in the order of 3%, and breaking down through key technical levels in the process, opening up the risk of further deep losses

Interest Rate Strategy

Trade Idea: NZ 1y1y 2y1y Steepener

Nick Smyth -
Download PDF

Global curves have flattened significantly over the past month and a half, with NZ being no exception. We highlighted two main risks when we recommended a 2s10s steepener in early March, namely a further rally in global rates and an intensification in funding pressures (FRA-OIS spreads) pushing up short-end swaps. As it transpired, both risks materialised, stopping us out of the position.

Interest Rate Strategy: LGFA 2022 Tender Preview

Nick Smyth -
Download PDF

The NZ Local Government Funding Agency (“LGFA”) has announced that it will issue a new 2.75% coupon, 14 April 2022 maturity bond next Wednesday. The 2022 will be the first bond on the LGFA to have a maturity (or coupon) that doesn’t match an NZGB.

Outlook for Borrowers: Post March OCR Review

Nick Smyth -
Download PDF

At the March OCR Review, the RBNZ kept the OCR on hold at 1.75%, as universally expected by economists. The Statement was largely a repeat of the version from February, with the Bank reiterating its expectation that growth should firm this year and inflation should eventually rise, after a dip in the coming quarters. The Bank finished by noting “numerous uncertainties” and reiterating a neutral policy stance. For reference, the last projections from the RBNZ in February had the first full rate hike in early-2020.

NZ Bank Bill-OIS and FRA-OIS Spreads – An Update

Nick Smyth -
Download PDF

USD 3 month Libor-OIS has risen sharply over recent months, from a low of around 10bps in November to above 50bps now. The increase in USD Libor-OIS appears to have been driven by...

Trade idea: 2s10s NZ steepener

Nick Smyth -
Download PDF

As we outlined earlier this year (see Taking Stock After NZ CPI), our bias is for a steeper NZ swaps curve in 2018. The primary rationale is that we see upside to UST yields from here and we expect the front-end of the NZ curve to remain anchored amid an unchanged OCR.

2029 NZGB Syndication RV

Nick Smyth -
Download PDF

The NZDMO is scheduled to syndicate a new 2029 maturity bond before the end of June. The exact timing of the syndication is unknown, but long-dated swap spreads have narrowed over recent weeks which may indicate the market is building-in some concession ahead of a potential announcement. 2027 and 2033 NZGB swap spreads are near their narrowest levels over the past 9 months.

Trade Recommendation: Receive August RBNZ OIS

Nick Smyth -
Download PDF

The market prices 2.5bps into the August RBNZ meeting (10% implied probability) and 11bps into the November RBNZ meeting (44% implied probability). Our base case, along with that of the RBNZ, is that the OCR will be on hold this year. We see the next move being a hike, in February 2019.

Outlook for Borrowers: Post Februarry MPS

Nick Smyth -
Download PDF

At the February Monetary Policy Statement (MPS), the RBNZ kept the OCR on hold at 1.75%, as universally expected by economists. Interim Governor Grant Spencer said the next move in the OCR could be either up or down, but the Bank’s main scenario is that the next move is a tightening. Consistent with this, the Bank retained the same OCR projection as it had in November, which shows the first full rate rise in early 2020.

A Framework for Thinking About NZ-US Spreads

Nick Smyth -
Download PDF

The spread between NZ and US rates has compressed to the tightest levels since the 1990s. The spread between 2 year NZ swaps and those in the US is now negative while the 10 year spread is around 50bps, some 60bps lower than the start of last year.

Interest Rate Strategy - Taking Stock After NZ CPI

Nick Smyth -
Download PDF

New Zealand rates have moved higher over the past few months, mainly driven by rising global rates. Before the CPI release, the 5 year swap rate had moved to 2.78% and at the front end, the 2 year rate had reached a 3 month high of 2.27%. While NZ rates have been dragged higher by global forces, they still significantly outperformed the US.

Markets Outlook

BNZ Markets Today

Nick Smyth -
Download PDF

US equities increased again overnight after more positive
earnings reports from US corporates, and as US-China
trade tensions moved off the headlines for a day. The
USD is mixed, with the NZD again being one of the
underperformers. Meanwhile, the US yield curve flattened
again, drawing a response from incoming NY Fed
President John Williams.

Downside Risk to CPI

BNZ Research -
Download PDF

Recent data continue to provide us with hope that the economy can continue to grow around its potential for some time to come. Importantly, the expansion should not be cut off at the knees by the central bank any time soon as CPI inflation remains at the bottom of the RBNZ’s target range. Thursday’s Q1 CPI data should confirm this. Moreover, there is a very real chance that the RBNZ (and maybe even the market) will again be surprised to the downside when the latest price data is released.

QSBO Stronger Than Its Seams

BNZ Research Team -
Download PDF

Overall, we anticipate a hanging-in-there type of result for tomorrow’s QSBO, rather than anything strong as an indicator of economic expansion. But this is not to lose sight of the NZIER survey’s clearest message – that the economy is getting extremely stretched.

Short and Sweet

BNZ Research Team -
Download PDF

We are keeping a close eye on labour market momentum – along with business investment indicators – given the slump in business confidence. The labour market will certainly be a key interface between a currently buoyant household sector and a less than confident business sector.

Maximum Sustainable Employment (Achieved Already?)

BNZ Research Team -
Download PDF

The government this morning confirmed a range of changes to the Reserve Bank of New Zealand’s modus operandi. These were hardly any revelation, given the prescriptiveness of the terms of the review process. . If anything, the largely reiterated inflation-related content might be seen as reinforcing a dovish bent on the part of the RBNZ. However, the new words relating to “maximising sustainable employment” might, ironically, highlight why the Bank can’t be too dovish, and might even need to turn hawkish in due course.

RBNZ to Stick Loosely to Its Script

BNZ Research -
Download PDF

s we’ve been saying for a good many months, the RBNZ will probably not be keen to follow the global tendency, toward less monetary stimulus – at least not soon. If there is a risk around Thursday’s OCR review it is that the Bank comes across a touch dovish, perhaps with reference to the near-term CPI. However, all up, we believe the Bank will affirm a steady-as-she-goes message.

Q4 GDP A Measure of Being Well

BNZ Research -
Download PDF

Thursday’s Q4 GDP report will be the highlight this week. Not that it’s looking like being a big deal, one way or the other. We estimate a steady quarterly gain of 0.7% (after its 0.6% outcome of Q3). This is what the Reserve Bank expects too, with reference to its February Monetary Policy Statement. A quarterly expansion of 0.7% would set annual growth of 3.1%. While that wouldn’t look especially strong in per capita terms it will probably appear robust to the recent transitions on the political front.

GDP Partials Dominate the Week Ahead

BNZ Research -
Download PDF


The week ahead will allow us to settle on our pick for Q4, 2017 GDP. At the moment we’ve got 0.5% penciled in for the quarter but the risks are very much skewed to the upside. The Reserve Bank plumped for 0.7% in its February MPS and this is, increasingly, looking like a good bet. But we’ll wait for this week’s partials before formalising our suspicions.

Time to Improve

BNZ Research -
Download PDF

It’s not just business sentiment that could do with a lift. The activity indicators in the ANZ survey – even though they held up a lot better than general confidence did – were still well below par. Granted, this is not inconsistent with our view of near-term slowness in GDP. However, we will need to see these activity pointers improve by mid-year if we are to retain confidence in our view that GDP growth will pick up the pace as 2018 progresses.

The Exuberance in Improved Productivity

BNZ Research Team -
Download PDF

Thursday’s likely-boosted productivity estimates might all be a bit of a wash in terms of inflation pressure. But they are relevant to understanding economic trends and performance – including the degree of exuberance integral to the household sector, which Friday’s retail trade figures will likely allude to.

Slump or Hiccup?

BNZ Research -
Download PDF

We have been expressing for some time now our concern that just about every asset looks overpriced and that a correction was long overdue. Is this that correction? Maybe. Whether it is or not, it is a timely reminder that asset prices of all descriptions have been running strong for a very long time now and, accompanying that strength, volatility has been very low.

RBNZ to Hold the Line

BNZ Research -
Download PDF

If it boiled down to just the local information over the recent months, the RBNZ could well perceive reason to signal a softer OCR track. However, such things are balanced by 1) the sense there is already a strong precautionary element to the record-low OCR setting of 1.75%, 2) the Bank’s recent emphasis on the flexibility it has in guiding inflation to the mid-point of its target band (akin to the current RBA approach of late) and 3) the fact there are a number of identifiable inflation impulses on the not-too-distant horizon, including now from global sources.

Taxing Times

BNZ Research -
Download PDF

Before the next MPS, the only NZ data which could potentially cause a stir are those regarding the December quarter labour market. These are due 7 February. New Zealand’s labour market is certainly steaming – if one consults the latest tax data.

Markets Today

BNZ Markets Today

Nick Smyth -
Download PDF

US Treasury yields rose again on Friday, with the 10 year yield up to 2.96%, its highest since early 2014. Equities fell again, with higher bond yields probably weighing, and the USD strengthened. The NZD is back down near to 0.72. Over the weekend, US Treasury Secretary Mnuchin mentioned he was considering a trip to China and was “cautiously optimistic” a deal could reached; this should help support risk assets to start the week.

BNZ Markets Today

Nick Smyth -
Download PDF

Commodity prices remain in the spotlight, with oil prices
making a fresh high again overnight, although they have
since eased back. The 10 year US Treasury increased
again, with the yield curve steepening for a change, amid
higher inflation expectations. US equity markets are lower
and the USD stronger.

BNZ Markets Today

Nick Smyth -
Download PDF

Most market moves have been reasonably modest
overnight, although US equities and bond yields have
pushed a little higher. Oil prices rose to a new, post-2014
high. The CAD and GBP have fallen after a dovish Bank of
Canada statement and lower than expected CPI
respectively. The NZD has again been one of the
underperformers in FX markets ahead of CPI today, and
NZD/AUD has eased back towards 0.94.

BNZ Markets Today

Nick Smyth -
Download PDF

US equities have moved higher overnight on some easing in geopolitical risks and ahead of more corporate earnings reports later this week. The US dollar is broadly weaker after President Trump accused China and Russia of “playing the currency devaluation game”. The NZD has been one of the laggards, and is unchanged from this time yesterday.

BNZ Markets Today

Nick Smyth -
Download PDF

It was a quiet end to last week, with most markets seeing modest moves. US stocks fell slightly but were up on the week, while the US yield curve continued to grind flatter. Oil prices made a new high.

BNZ Markets Today

Jason Wong -
Download PDF

Market movements have been modest although there is
still a notable grind up in the NZD, supported by a better
risk backdrop.

BNZ Markets Today

Jason Wong -
Download PDF

Market price action has been fairly minimal across the board. Rising Middle East tensions see a mild risk-off tone and oil prices continuing to rally, while the NZD is down slightly.

BNZ Markets Today

Jason Wong -
Download PDF

Commodity currencies have outperformed and equity
markets have recovered since President Xi’s speech
yesterday allayed fears of a US-China trade war. Other
currencies and bond markets have seen only modest price
movements.

BNZ Markets Today

Jason Wong -
Download PDF

Market sentiment began the week on a positive note, seeing a rebound in US equities, a nudge higher in UST yields and the NZD outperform, while the USD is weaker across the board.

BNZ Markets Today

Jason Wong -
Download PDF

The US-China verbal war on trade continued on Friday, driving down US equities by more than 2% with only a little spill-over for dollar-bloc currencies and UST yields.

BNZ Markets Today

Jason Wong -
Download PDF

The USD is broadly stronger as markets take a more
optimistic view on US-China trade tensions, while US rates
drift higher against a backdrop of a further recovery in
equities.

BNZ Markets Today

Jason Wong -
Download PDF

The US-China trade war has heated up but the market is taking this in its stride. Initial market movements on headlines haven’t been sustained. Net FX movements have been minimal, apart from the

BNZ Markets Today

Jason Wong -
Download PDF

On a slow news day, US equities are modestly higher
after the chunky fall yesterday. Commodity currencies
have outperformed and UST yields are higher on the
improved market sentiment.

BNZ Markets Today

Jason Wong -
Download PDF

Most markets were closed for the Easter Monday holiday but unfortunately the US market is open and stocks have been pummelled as the new quarter begins. This has seen the NZD soften a little, while JPY has outperformed.

BNZ Markets Today

Nick Smyth -
Download PDF

The S&P500 has stabilized overnight after sustaining heavy falls late in the New York session yesterday. The 10 year Treasury yield broke below its recent trading range yesterday and the US yield curve flattened its narrowest level since 2007. The USD is broadly stronger but remains within recent ranges.

BNZ Markets Today

Nick Smyth -
Download PDF

Market moves were reasonably modest overnight, with no
top tier economic data being released and not much in the
way of headlines around US-China trade negotiations. US
bond yields fell, possibly related to month-end buying
while US equities also gave back some of their gains from
yesterday.

BNZ Markets Today

Nick Smyth -
Download PDF

With no major economic data released overnight, headlines around US-China trade tensions remained the dominant market driver. After falling sharply last week, US stocks bounced back overnight on hopes that the two sides could negotiate an agreement and avoid the use of tariffs. The USD is weaker once again and at one-month lows. The NZD/AUD made an eight month high, as it broke above 0.94.

BNZ Markets Today

Nick Smyth -

US stocks fell sharply again on Friday as concerns mounted about an escalation in US-China trade tensions. The USD was broadly weaker, with the NZD doing surprisingly well amidst the risk-off backdrop.

BNZ Markets Today

Jason Wong -
Download PDF

In overnight trading, the USD has pared back some of its
losses seen since yesterday before and after the FOMC’s
statement. UST yields have fallen further as US equity
markets show another chunky fall

BNZ Markets Today

Jason Wong -
Download PDF

The USD took on a softer tone ahead of the FOMC statement and has made further losses since, while UST yields have nudged higher.

BNZ Markets Today

Jason Wong -
Download PDF

Another rough day for equity markets has helped support
the bond market, while in the currency market, GBP leads
the way while the AUD has underperformed.

BNZ Markets Today

Jason Wong -
Download PDF

The NZD and AUD ended last week on a soft note, showing some clear underperformance on a day when other market movements were modest.

BNZ Markets Today

Nick Smyth -
Download PDF

The USD is broadly higher overnight with Trump’s new economic
advisor Larry Kudlow perhaps helping sentiment by declaring he
wanted to see the currency “a wee bit stronger”. The NZD is
back down to 0.7270. US bond yields have nudged up while
equities are near unchanged.

BNZ Markets Today

Nick Smyth -
Download PDF

US equity and bond yields have fallen modestly overnight after a disappointing US retail sales release and as the spectre of more trade tariffs hangs over the market. FX moves have again been reasonably contained, with the NZD holding at around 0.7330.

BNZ Markets Today

Nick Smyth -
Download PDF

Bond yields are slightly lower overnight after US core CPI
matched market expectations, allaying some fears of more
aggressive Federal Reserve tightening. US equities have
fallen slightly with President Trump’s decision to fire
Secretary of State Rex Tillerson weighing on sentiment. The
USD is weaker overnight and the NZD is back up to 0.7345, a
two-week high.

BNZ Markets Today

Nick Smyth -
Download PDF

Markets were very quiet overnight, with no major economic data released. Market movements across bonds, equities and currencies were very modest. The focus turns to the release of US CPI tonight.

BNZ Markets Today

Jason Wong -
Download PDF

US stocks surged higher on Friday as the non-farm payrolls report showed a large gain in employment but some moderation in US wage growth. The US dollar was mixed while UST yields rose modestly. The NZD rose slightly.

BNZ Markets Today

Jason Wong -
Download PDF

The USD has made some broadly-based gains as the US
policy on steel and aluminium tariffs looks to be watered
down, while EUR has underperformed following the ECB
announcement and for the same reason global bond rates
are lower.

BNZ Markets Today

Jason Wong -
Download PDF

The risk-off mood that developed during the local session yesterday, as US trade policy remained in the spotlight, has been sustained overnight, seeing the NZD modestly weaker, alongside weaker US equities.

BNZ Markets Today

Jason Wong -
Download PDF

The NZD has outperformed following some positive
newsflow on North/South Korea relations, taking Trump’s
tariff proposals off the front pages. Equity and bond
markets only show modest changes.

BNZ Markets Today

Jason Wong -
Download PDF

Equity markets are higher and US 10-year rates have nudged up since the NZ close. Currency movements have been modest, with CAD a notable underperformer.

BNZ Markets Today

Nick Smyth -
Download PDF

US equities have fallen again overnight, and this has
caused US Treasury yields to decline slightly. President
Trump announced he was going to impose tariffs on steel
and aluminium imports, overshadowing a very strong ISM
Manufacturing Survey. Meanwhile, there was a slightly
more dovish tone to Fed Chair Powell’s testimony to the
Senate. The USD is mixed overnight, with the NZD one of
the stronger performing currencies.

BNZ Markets Today

Nick Smyth -
Download PDF

US equity markets have consolidated overnight after falling in response to Fed Chair Powell’s hawkish comments yesterday. The 10 US Treasury yield has fallen back from the highs reached yesterday, with the yield curve flattening. The USD is a little stronger overnight, while the GBP has fallen as tensions mount between the EU and UK over Brexit.

BNZ Markets Today

Nick Smyth -

US Treasury yields moved higher overnight after Fed Chair
Powell alluded to the potential for the Fed ‘dots’ to rise at
the upcoming March meeting. US equity markets
declined modestly and the USD strengthened. The NZD
was one of the worst performing currencies over the past
24 hours.

BNZ Markets Today

Nick Smyth -
Download PDF

Global equity indices moved higher again overnight while bond yields fell slightly ahead of Fed Chair Powell’s testimony to Congress. There was no major economic data overnight.

BNZ Markets Today

Nick Smyth -
Download PDF

US equities ended the week higher while US bond yields fell and the yield curve flattened. Ahead of new Fed Chair Powell’s testimony this week, the Fed’s semi-annual Monetary Policy Report noted that US wage growth was “moderate, and didn’t signal any heightened concern about inflation risks. The NZD underperformed on Friday and sits just below 0.73.

BNZ Markets Today

Nick Smyth -
Download PDF

US equities are higher, bond yields a bit lower, and the US
dollar weaker as markets have retraced the moves seen
after the FOMC minutes yesterday (which were initially
interpreted as hawkish). The ECB minutes suggested that
the central bank’s forward guidance will change in the
upcoming meetings. The NZD is unchanged from this
time yesterday.

BNZ Markets Today

Nick Smyth -
Download PDF

US stocks moved higher overnight but, otherwise, market moves were reasonably subdued as we wait the release of the FOMC minutes in an hour or so. The US dollar is again a bit stronger against most of the major currencies, with the NZD sitting around 0.7345. The GBP has been buffeted by more Brexit talk, a mixed labour market report, and some hawkish comments from the BoE.

BNZ Markets Today

Jason Wong -
Download PDF

In a slow start to the week, US Treasury yields have
drifted higher, helping support the USD while the NZD is
mixed on the crosses.

BNZ Markets Today

Doug Steel -
Download PDF

A very quiet day yesterday. So quiet it took a fair amount of Monday morning before the NZD even traded. China and Hong Kong markets were closed for Lunar New Year holidays. The market slumber continued overnight with the US out for Presidents’ Day holiday.

BNZ Markets Today

Jason Wong -
Download PDF

Last week ended on a fairly uneventful note, with modest changes for NZD crosses. In Friday’s overnight trading session, the USD staged a broadly-based recovery, US 10-year Treasury yields nudged lower, while US equities were flat.

BNZ Markets Today

Jason Wong -
Download PDF

A soft USD theme continues to prevail although after
falling through much of yesterday it’s trying to recover.
The US 10-year Treasury yield pushed on up to a fresh
high, but has peeled off 5bps since, while US equities
continue to recover.

BNZ Markets Today

Jason Wong -
Download PDF

US CPI data were stronger than expected, however the positive impact on the USD quickly faded. US Treasury yields are higher, but that hasn’t stopped US equities recovering further.

BNZ Markets today

Jason Wong -
Download PDF

USD weakness has returned, showing a broadly based
reduction, as investors seek out safe havens like JPY and
CHF. Equity markets are in the red while US 10-year
Treasuries are relatively steady.

BNZ Markets Today

Jason Wong -
Download PDF

It’s been a slow start to the week, with little news to digest. A positive mood hangs over equity markets and the US 10-year Treasury rate tested a fresh high, while currency movements have been modest.

BNZ Markets today

Jason Wong -
Download PDF

Friday was another choppy day for equity markets,
although the S&P500 managed to end on a positive note.
US Treasury yields nudged higher, while the NZD pushed
higher.

BNZ Markets Today

Nick Smyth -
Download PDF

Stock markets are lower overnight and US Treasury yields
higher, and markets remain reasonably volatile. The Bank
of England surprised markets by saying it expected to
raise interest rates earlier and faster than previously
thought. The USD continued its recent mini resurgence
and is up against most of the major currencies (the GBP
being one exception).

BNZ Markets Outlook

Jason Wong -
Download PDF

Calm has returned to markets the past 24 hours, with stock markets recovering from the big losses earlier this week and bond yields moving higher as well. The VIX is back down to almost 25. The USD is stronger across the board, with the NZD back a little below 0.73. The RBNZ will be the focus today.

BNZ Markets Today

Nick Smyth -
Download PDF

There were wild market moves on Monday night and
Tuesday with US stocks down sharply and erasing the
gains for 2018. At one point yesterday, S&P500 futures
were down more than 8% from where they closed last
week, although they have bounced back somewhat over
the past few hours and are starting to show some signs of
stabilising (for now at least). The VIX rose to 50. Bond
yields have fallen sharply in response to the stock market
meltdown but FX has been surprisingly stable. The NZD is
close to 0.73, similar to where it closed last week.

BNZ Markets Today

Nick Smyth -
Download PDF

US bond yields rose further on Friday night after the US non-farm payrolls report showed faster than expected wage growth. The growing prospect of higher US inflation and faster Fed tightening spilled over into other markets, with US stock markets slumping around 2%, the USD strengthening and the VIX rising to its highest level since the US Presidential election.

BNZ Markets Today

Jason Wong -
Download PDF

The start of the new month sees more of the same, with broadly-based USD weakness, albeit modest, upward pressure on global bond rates and US equities up.

BNZ Markets Today

Jason Wong -
Download PDF

US 10-year Treasury yields nudged up to a fresh high but US equities are unperturbed today, following the nearly 2% loss in the S&P500 seen over the previous couple of sessions. Currencies haven’t changed much since the local close, but for the day as a whole, the NZD has performed well amidst a mildly softer USD backdrop.

BNZ Markets Today

Jason Wong -
Download PDF

Markets are trading a different pattern today than we’ve been used to, with the USD stronger, weaker equity markets and higher global bond rates, led by the long end.

BNZ Markets Today

Jason Wong -
Download PDF

The USD ended the week on a soft note helping to propel US equities to another record high, while global bond rates drifted higher. For the week, the NZD was 1% higher against the USD but down slightly on all the other major crosses.

BNZ Markets Today

Nick Smyth -
Download PDF

The dollar is weaker again overnight, although that’s as much a reflection of EUR strength, after ECB President Draghi didn’t push back against the recent rise in the euro. In Davos, US Treasury Secretary Mnuchin said there were benefits and costs to the USD’s current value, which didn’t do much to change the market’s perception that the US administration wants a weaker dollar. US stocks and bond yields were largely unchanged. The NZD has recovered a bit of ground against the USD since the weaker-than-expected CPI release yesterday.

BNZ Markets Today

Nick Smyth -
Download PDF

The USD is weaker across the board overnight after US Treasury Secretary Mnuchin said a weak dollar was good for US trade and they weren’t concerned about short-term movements. The NZD is above 0.74 as we write. The GBP has also been boosted a stronger than expected employment report and more encouraging comments on Brexit. The S&P500 is broadly unchanged, while 10 year Treasury yields have risen back to recent highs.

BNZ Markets Today

Nick Smyth -
Download PDF

It was more of the same again overnight, with US stocks pushing higher and the USD weaker. The US administration announced it was increasing tariffs on imported solar panels and washing machines, although this hasn’t really dented sentiment. The NZD continued to rise and is now around 0.735.

NZ At A Glance

NZ At A Glance

Stephen Toplis -
Download PDF

Currently the NZ economy is in an enviable state. Growth is robust, employment prospects are good, the housing market is stable, global demand is supportive, we’ve got fiscal surpluses and interest rates are low. From here, though, things get a little more difficult and we expect economic growth to moderate despite significant fiscal stimulus. Nonetheless, barring a major asset price correction, induced by global monetary tightening, the prospects remain relatively sound for the medium term.

Rural Wrap

Deliberating Dairy

Doug Steel -
Download PDF

Fonterra has lifted its milk price forecast for 2018/19 to $6.55 and so have we. This follows from generally higher international prices and a relatively stable NZD during 2018. We expect global dairy prices to drift lower in 2018, but downside risks have moderated with a higher Euro, higher oil prices, and robust dairy demand. Reflecting this, we lift our 2018/19 milk price forecast to $6.10. But with wide error bounds around any season-ahead milk price forecast, we look at some alternative scenarios.

Not All Bad

Doug Steel -
Download PDF

Farmer confidence has fallen sharply over recent months. We take a look at what might be behind the confidence slide. It’s interesting that this time around it is not the exchange rate or product prices that are weighing most on farmer’s minds.