Markets movements have been modest across equities, rates and currencies.<\/p>\n
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.\u00a0 US equities opened stronger, with the more speculative areas outperforming, including IT stocks. In early afternoon trading the S&P500 is up 0.4%.<\/p>\n
US Treasuries have traded a tight range and the 10-year rate is barely higher from the NZ close at 4.09%. President Trump said he will announce the new Fed Chair \u201cprobably\u201d early 2026.\u00a0 Prediction markets give Kevin Hassett, who has a close relationship with Trump, about an 80% probability of getting the job.<\/p>\n
Yesterday, Japan\u2019s auction of 10-year JGBs drew solid demand, which was a relief to the market after the recent market selloff that has taken yields across the curve to multi-decade highs, ahead of another massive supplementary Budget and increased chance of the BoJ hiking rates later this month.\u00a0 Yesterday, Japan\u2019s finance and economic ministers didn\u2019t indicate any objections to a possible interest rate increase after BoJ Governor Ueda\u2019s clearest hints yet on Monday that a December rate hike was live. Market pricing for a December rate hike has pushed higher to 21bps, implying about an 85% probability.<\/p>\n
Rising expectations of a BoJ rate hike have done little to support the yen.\u00a0 Some strength on Monday after Ueda\u2019s messaging has reversed and USD\/JPY trades around 156. \u00a0A 25bps hike would leave real Japanese rates at deeply negative levels. Stronger risk appetite early in NY trading helped the NZD lift to 0.5745 but this move faded somewhat, and the currency is back to 0.5730.\u00a0 Still, commodity currencies have performed a little better than others, and the NZD is slightly higher on crosses against JPY, EUR and GBP, but moves have been insignificant.<\/p>\n
Euro area CPI inflation ticked up to 2.2% y\/y in November, one-tenth higher than expected, while the core figure was steady at 2.4%, as expected. With the picture remaining one of relatively steady inflation, close to target, ECB monetary policy, which has remained on hold since June, looks likely to remain that way for some time. Market pricing is consistent with unchanged policy through 2026, with a modest chance of a final cut at some stage.<\/p>\n
In its quarterly update, the OECD said the global economy has proved more resilient than expected this year, supported by improved financial conditions, rising AI-related investment and trade, and macroeconomic policies.\u00a0 Global GDP growth is projected to ease from 3.2% in 2025 to 2.9% in 2026 and then strengthen slightly to 3.1% in 2027. GDP growth forecasts for many regions were nudged higher for this year and next year.<\/p>\n
Following a spate of attacks on Russian commercial ships, President Putin warned that Russia may consider striking the ships of countries supporting Russia if these attacks continue. Putin is currently meeting the US on next stages in a possible Ukraine-Russia peace deal.\u00a0 Earlier, Putin said Europeans were hindering a deal, \u201cthey are on the side of war\u201d as they are seeking demands that are not acceptable to Russia. There has been a little intraday volatility in oil prices, but Brent crude is modestly weaker for the day, trading just below USD63 per barrel.<\/p>\n
Dairy prices continue to fall at GDT auctions.\u00a0 The GDT price index now shows eight consecutive declines, with a trend of progressively greater falls over recent events, including a 4.3% fall at the overnight auction.\u00a0 Increasing global supply has been the key driver and there is no sign of this abating.<\/p>\n
Global forces were largely responsible for lifting NZGB yields yesterday, driven by the long end.\u00a0 The 10-year rate rose 5bps to 4.37%.\u00a0 The 10-year swap rate also rose 5bps to 4.05%.\u00a0 The short end of the market was still experiencing some decent positioning adjustments in the wake of the RBNZ\u2019s hawkish cut last week. The 2-year rate was higher through most of the session before a late dip into the close and it ended the day down 3bps to 2.86%.<\/p>\n
On her second day on the job, RBNZ Governor faced Parliament\u2019s Finance and Expenditure Committee, where she reiterated that under her leadership the Bank would be \u201claser focused\u201d on low and stable inflation, adding \u201cplease, please remember how hurtful high inflation is for households\u201d.\u00a0 It was good to see these inflation-fighting credentials on display early in her term.<\/p>\n
On the economic calendar today, Australian Q3 GDP is released, with the consensus sitting at 0.7% q\/q, which would take annual growth to 2.2%.\u00a0 Tonight, the US ADP private payrolls and ISM services survey will be closely watched.<\/p>\n
Select chart tabs<\/p>\n
US$
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Jason Wong is the Senior Markets Strategist at BNZ Markets.<\/p>\n","protected":false},"excerpt":{"rendered":"Markets movements have been modest across equities, rates and currencies. As US markets opened overnight, risk appetite was…\n","protected":false},"author":2,"featured_media":165116,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[138,219,111,139,69],"class_list":["post-165115","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-new-zealand","tag-newzealand","tag-nz"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/165115","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=165115"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/165115\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/165116"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=165115"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=165115"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=165115"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}