US stocks track down with all eyes on Nvidia results due today. Treasury yields rise as traders eye more supply. The Reserve Bank of New Zealand cuts as expected, and lowers its rate track - although one dissenter wanted a hold. And disinflation progress has stalled in Australia.
In our deep-dive interview, ANZ New Zealand Chief Economist Sharon Zollner says the RBNZ’s 5-to-1 vote yesterday indicates New Zealand’s rate setting committee may be nearing a turning point.
5 things to know in 5 minutes:
US stocks fell slightly overnight as investors waited on results from mega-cap Nvidia: Meanwhile, the yields on US Treasuries rose. On the data front, ANZ Economist Bansi Madhavani says the US economy is not out of the woods following ongoing contraction in the Richmond Fed’s manufacturing index.
The Reserve Bank of New Zealand cut its official cash rate 25 basis points to 3.25% yesterday, while also reducing its forward guidance track - indicating the OCR may fall below 3% later in the year. However, ANZ Chief Economist Sharon Zollner say there was something for everyone in the decision, with one of the rate setting committee’s six members voting to keep the OCR on hold.
Meeting minutes indicated the person who voted for a hold in the OCR was concerned about a recent lift in short-term inflation expectations. Sharon says that may be temporary and linked to headlines about the impacts of tariffs on global prices. ANZ Research continues to expect the OCR to go to 2.5% in this rate cutting cycle.
Australia’s monthly CPI remained at 2.4% in April, compared to market expectations for a fall to 2.2%. ANZ Senior Economist Adelaide Timbrell - who was forecasting 2.5% - says that disinflation progress in Australia appears to have stalled in recent months, with the core measure rising from 2.7% to 2.8% annually.
Bansi says US policy makers continue to show concern about inflation pressures of the back of the administration’s tariff plans. New York Fed President John C. Williams said in comments overnight that he was worried about the risk of inflation expectations becoming un-anchored.
Cheers,
Bernard
PS: I’ll be heading off on holiday from tomorrow, through June. My colleague Alex Tarrant will be stepping in for the next month. You can catch Alex tomorrow with analysis of a rates decision in Korea, and the latest ANZ New Zealand business outlook results.
