Global markets bedded in a 20 basis point rise in US 2 year Treasury yields overnight after more hawkish signals from the Fed, which kept the US dollar solid against the Aussie and Kiwi dollars.
In our bonus deep-dive interview, ANZ’s New Zealand Chief Economist Sharon Zollner explains why the RBNZ is now likely to cut first in August. That’s later than market expectations for a May cut, but earlier than her previous view of the first cut being in February next year.
5 things to know
Global markets focused on Fed Atlanta President Raphael Bostic’s comments that a rate cut wasn’t likely until the September quarter. The 2 year Treasury yield consolidated around 4.35%, up 20 basis points this week. The Aussie dollar was steady at 65.63 USc at 5am Sydney Melbourne time, but still down more than a cent on the week. The Kiwi was firm at 61.07 USc, also down a cent from Monday.
ANZ’s Head of G3 Economics Brian Martin says Bostic wants the FOMC to see more data before it can be certain of cutting.
Brian says markets did seem to be listening more this time to a central banker telling them to back off the idea of a March cut. That’s now only priced at a 50/50 chance, down from 80% a week ago.
Australian jobs fell 65,000 in December. Markets had expected a 15,000 rise. ANZ Australia Economist Blair Chapman says the data leaves the RBA on track to cut in November.
Higher exports were behind a surprisingly-strong 6.8% growth in Vietnam’s GDP in the December quarter from the same quarter a year ago, says ANZ Economist Arindam Chakraborty.
Cheers
Bernard
PS: Look out on Monday for a deep dive interview with Adelaide Timbrell on the difficult outlook for CBD retail property in Australia.
