- New Zealand’s benchmark Treasury yields rally, equities drop on RBNZ-inspired move.
- RBNZ matches market forecasts of announcing 0.75% rate hike, unveiled recession fears.
- NZ 10-year Treasury yields refresh one-week high, NZX 50 declines 0.70% intraday.
- Speech from RBNZ Governor Adrian Orr will be important for fresh clues.
Markets in New Zealand (NZ) portray a stark reaction to the Reserve Bank of New Zealand’s (RBNZ) Interest Rate Decisions on early Wednesday.
That said, the RBNZ matched market forecasts while announcing 75 basis points (bps) of a rate hike during its updates to convey the tenth interest rate lift. It should be noted, however, that downbeat economic forecasts suggesting recession in 2023 and sour comments from New Zealand Finance Minister Grant Robertson, suggesting a recession is on the doorstep, also played their roles.
While portraying the moves, NZ 10-year Treasury yields jump 3.87% intraday to 4.30% whereas New Zealand’s benchmark equity index NZX50 dropped 0.70% intraday by the press time.
In addition to the actual 75 bps rate hike, the tenth in the line, the statements from the monetary policy report suggesting that the policymakers also considered a 100 bps rate hike, before announcing the latest move, seemed to portray the utter hawkish move by the RBNZ. On the same line is the RBNZ’s prediction of the Official Cash Rate (OCR) peak of 5.5%, versus the current level of 4.25%.
That said, traders from Auckland are likely to witness further liquidation in equities, as well as a rush towards disowning the Kiwi bonds, ahead of the key activity numbers and the Federal Open Market Committee (FOMC) Meeting Minutes. It should be noted that the press conference from RBNZ Governor Adrian Orr will be closely watched for immediate directions as traders will seek more clues backing the latest hawkish.
Also read: Breaking: NZD/USD is volatile on RBNZ hawkish 75Bp hike
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD clings to modest gains above 1.0650 ahead of US data
EUR/USD trades modestly higher on the day above 1.0650 in the early American session on Tuesday. The upbeat PMI reports from the Eurozone and Germany support the Euro as market focus shift to US PMI data.
GBP/USD extends rebound, tests 1.2400
GBP/USD preserves its recovery momentum and trades near 1.2400 in the second half of the day on Tuesday. The data from the UK showed that the private sector continued to grow at an accelerating pace in April, helping Pound Sterling gather strength against its rivals.
Gold flirts with $2,300 amid receding safe-haven demand
Gold (XAU/USD) remains under heavy selling pressure for the second straight day on Tuesday and languishes near its lowest level in over two weeks, around the $2,300 mark in the European session. Eyes on US PMI data.
Here’s why Ondo price hit new ATH amid bearish market outlook Premium
Ondo price shows no signs of slowing down after setting up an all-time high (ATH) at $1.05 on March 31. This development is likely to be followed by a correction and ATH but not necessarily in that order.
US S&P Global PMIs Preview: Economic expansion set to keep momentum in April
S&P Global Manufacturing PMI and Services PMI are both expected to come in at 52 in April’s flash estimate, highlighting an ongoing expansion in the private sector’s economic activity.