US stocks and gold hit new record highs overnight ahead of an expected Fed cut this week, with more to come. The Aussie and Kiwi dollars finally join the risk-on rally. China’s economy slows, and the Peoples Bank of China is set to start buying bonds.
In our Deep Dive interview, ANZ New Zealand Chief Economist Sharon Zollner explains why she’s downgraded her June quarter GDP forecast to a contraction of 0.4% from a 0.1% fall. The data is due on Thursday.
5 things to know in 5 minutes:
US stocks and gold rose again overnight to fresh record highs as investors lock in expectations the Fed will cut this week, and then cut at least four more times by mid-2026. ANZ Head of FX Strategy Mahjabeen Zaman says the Aussie and Kiwi dollars have finally started catching up to this risk-on rally in the last week.
China’s economy slowed more than expected in August. ANZ Senior China Strategist Zhaopeng Xing says the Governments efforts to curb over-production and competitive deflation is having an impact. It’s known as the ‘anti-involution’ campaign.
Zhaopeng says the authorities are likely to be patient and not over-react to any downturn through rate cuts or fiscal stimulus.
However, he says one way China’s authorities might intervene is through the bond markets, citing talk the Peoples Bank of China will soon start buying bonds again to force down yields that have spiked recently.
The BusinessNZ-BNZ survey of New Zealand’s services sector found it slid back into contractionary territory in August, says ANZ Senior Economist Matt Galt.
Cheers,
Bernard.
PS: Catch you tomorrow with a look-ahead to the Fed’s decision, and how it’s affecting currencies.
