US Treasury yields and the dollar rose overnight as traders pared back expectations of the Fed’s rate cuts. Japan’s Nikkei closed up over 2.5% on expectations of a dovish Bank of Japan hike today, and the RBA is set to hold, but maintain a tightening bias.
In our bonus deep dive interview, ANZ Senior Economist Miles Workman says New Zealand is at risk of a credit rating downgrade because of a high current account deficit.
5 things to know:
US Treasury yields rose two to three basis points overnight as traders reduced their bets the Fed will cut in June to less than a 50% chance. The Nikkei closed up 2.5% on hope an expected BoJ hike will leave policy relatively loose.
The Bank of Japan is widely expected to end eight years of negative interest rates tonight, hiking for the first time since 2007. But it may do more, ANZ International Economist Tom Kenny says.
Although a hike would be historic, markets are ready and have already priced it in after strong wage growth figures on Friday. ANZ Head of FX Research Mahjabeen Zaman says other factors may drive dollar/yen more.
The Reserve Bank of Australia is expected to hold its cash rate at 4.35% at 2.30pm Sydney/Melbourne time. ANZ’s Head of Australian Economics Adam Boyton says the focus will be on just how much of a tightening bias remains.
Industrial production and capital investment data from China yesterday for January and February was better than expected, says ANZ China Senior Strategist Zhaopeng Xing, although they were flattered by a low base a year ago.
Cheers
Bernard
PS: Catch you tomorrow with reaction to the RBA and Bank of Japan rate decisions.
