bnzeconomists

Flattening of the yield curve as the short end continues to rise; market now fully pricing in OCR hike by March 2014

Flattening of the yield curve as the short end continues to rise; market now fully pricing in OCR hike by March 2014

Sell-off in NZ$ surprising given strength of local data and fundamentals

Sell-off in NZ$ surprising given strength of local data and fundamentals

With the NZ-US 3-year interest rate differentials at around 340 bps, historical correlations suggest the NZ$/US$ cross rate should be above 85c

With the NZ-US 3-year interest rate differentials at around 340 bps, historical correlations suggest the NZ$/US$ cross rate should be above 85c

The demise of the Kiwi dollar due to combination of US$ strength, commodity price weakness and a string of upbeat US economic indicators

The demise of the Kiwi dollar due to combination of US$ strength, commodity price weakness and a string of upbeat US economic indicators

Article notes upward pressure on RBNZ to lft interest rates; NZ$/A$ grinds higher to 5-year highs

Article notes upward pressure on RBNZ to lft interest rates; NZ$/A$ grinds higher to 5-year highs

Positive momentum behind the NZ$ along with macro and leveraged buying saw the NZ$/A$ almost break 90c

Positive momentum behind the NZ$ along with macro and leveraged buying saw the NZ$/A$ almost break 90c

Stonger US$ and sharp losses in A$ hit the NZ$ hard last week; NZ$/US$ down around 1.7%

Stonger US$ and sharp losses in A$ hit the NZ$ hard last week; NZ$/US$ down around 1.7%

Higher US yields sees NZ 2-year swaps close over 3.6% and hit the top of its three month range

Higher US yields sees NZ 2-year swaps close over 3.6% and hit the top of its three month range

A Fed decision to taper in December may not be unambiguously positive for the US$ and US bond yields

A Fed decision to taper in December may not be unambiguously positive for the US$ and US bond yields

On the global front, both in terms of real growth and simmering inflation pressures NZ is an outlier; rate hikes will not be too far away

On the global front, both in terms of real growth and simmering inflation pressures NZ is an outlier; rate hikes will not be too far away

Surprising response to NZ PPI data as NZ$/US$ pushed up to 84c; overnight buying of US$ sees the NZ$/US$ cross at 82.8c currently

Surprising response to NZ PPI data as NZ$/US$ pushed up to 84c; overnight buying of US$ sees the NZ$/US$ cross at 82.8c currently

Constrained NZ govt bond supply and range-bound US 10-year yields will possibly limit the sell-off in NZ long-bonds if the OCR rises

Constrained NZ govt bond supply and range-bound US 10-year yields will possibly limit the sell-off in NZ long-bonds if the OCR rises

RBA Board statement more upbeat than October's, citing “mounting evidence that monetary policy was supporting activity”

RBA Board statement more upbeat than October's, citing “mounting evidence that monetary policy was supporting activity”

Markets see Yellen and providing continuity to existing policies but potentially setting even stricter labour market criteria before withdrawing stimulus

Markets see Yellen and providing continuity to existing policies but potentially setting even stricter labour market criteria before withdrawing stimulus

Seasonally adjusted trade surplus for Eurozone widened further than expected (to €14.3b in September); likely to be as a result of weak domestic demand for imports

Seasonally adjusted trade surplus for Eurozone widened further than expected (to €14.3b in September); likely to be as a result of weak domestic demand for imports

Likely to see both the RBNZ and RBA to be in an interest rate hiking mode by mid to late 2014

Likely to see both the RBNZ and RBA to be in an interest rate hiking mode by mid to late 2014

Both the US October industrial production and US Empire Manufacturing index for November came in below expectations causing the US$ index to slip

Both the US October industrial production and US Empire Manufacturing index for November came in below expectations causing the US$ index to slip

The latest Govt bond tender (April 2020's) attracted a bid-to-cover ratio of 2.8x and sold at yields around pre-tender market values

The latest Govt bond tender (April 2020's) attracted a bid-to-cover ratio of 2.8x and sold at yields around pre-tender market values

Dovish undertones in Yellen’s testimony; labour market is still “far short” of potential and inflation will remain below target “for some time”

Dovish undertones in Yellen’s testimony; labour market is still “far short” of potential and inflation will remain below target “for some time”

Despite LVR restrictions being the equivalent of a 30 bps hike in the OCR the RBNZ reiterated its forecasts for the next 2-years in its latest Financial Stability Report

Despite LVR restrictions being the equivalent of a 30 bps hike in the OCR the RBNZ reiterated its forecasts for the next 2-years in its latest Financial Stability Report

The GBP was the best performing currency overnight but the NZ$ got a boost from the hawkish bias in the RBNZ's Financial Stability Report

The GBP was the best performing currency overnight but the NZ$ got a boost from the hawkish bias in the RBNZ's Financial Stability Report

Too early to see what impact LVR restrictions are having on property market but market still expecting OCR hikes around mid 2014

Too early to see what impact LVR restrictions are having on property market but market still expecting OCR hikes around mid 2014

The NZD/GBP traded lower following softer-than-expected UK inflation data; NZD/GBP resistance seen at 0.5190

The NZD/GBP traded lower following softer-than-expected UK inflation data; NZD/GBP resistance seen at 0.5190

Bond yields higher across the curve with 105 bps of rate hikes priced in for next year

Bond yields higher across the curve with 105 bps of rate hikes priced in for next year

Reports are emerging that a number of ECB members were against the rate cut decision last week

Reports are emerging that a number of ECB members were against the rate cut decision last week