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23 Apr 2015
Market Movers: NZD worst performer, ACGBs underperform again – TDS
FXStreet (Barcelona) - Prashant Newnaha, Strategist at TD Securities, summarizes the market performance during the Asian trade, noting that NZGBs and NZD/USD are reacting to speculation about a potential rate cut by RBNZ.
Key Quotes
“Trends seen in overnight trade have filtered through into Asia. The USD remains largely unchanged, equity markets are firmer, and ACGB and NZGB yields have edged up, following the overnight moves in Bund/Gilts and USTs.”
“ACGBs are underperforming again today, +10bps at the long end, in contrast to the +3.5bps move up in 10yr NZGBs. While the recent run of poor data is expected to keep the Fed on hold for longer, it appears that sentiment with respect to the RBA cutting rates next month and below 2% in this cycle is driving recent ACGB underperformance.”
“In contrast, the more subdued back up in NZGB yields appears to be linked to recent press reports that the RBNZ could potentially cut rates.”
“While we doubt the RBNZ has appetite to do so anytime soon, the market appears to have focused on RBNZ Assistant Gov comments today that weaker demand would prompt rate cut consideration, even though we read today’s speech as more hawkish.”
“The NZD is the worst performer in G10 space, down 1% today to US$0.7590, driving the AUDNZD from NZ$1.0130 pre McDermott’s speech to NZ$1.0225, near session highs.”
“Besides India and Australia, that are unchanged, all other equity indices are in the green today, but the gains are moderate, on average +0.3% around the region.”
“Most commodities are unchanged, but iron ore continues its recovery, +1.5% today.”
Key Quotes
“Trends seen in overnight trade have filtered through into Asia. The USD remains largely unchanged, equity markets are firmer, and ACGB and NZGB yields have edged up, following the overnight moves in Bund/Gilts and USTs.”
“ACGBs are underperforming again today, +10bps at the long end, in contrast to the +3.5bps move up in 10yr NZGBs. While the recent run of poor data is expected to keep the Fed on hold for longer, it appears that sentiment with respect to the RBA cutting rates next month and below 2% in this cycle is driving recent ACGB underperformance.”
“In contrast, the more subdued back up in NZGB yields appears to be linked to recent press reports that the RBNZ could potentially cut rates.”
“While we doubt the RBNZ has appetite to do so anytime soon, the market appears to have focused on RBNZ Assistant Gov comments today that weaker demand would prompt rate cut consideration, even though we read today’s speech as more hawkish.”
“The NZD is the worst performer in G10 space, down 1% today to US$0.7590, driving the AUDNZD from NZ$1.0130 pre McDermott’s speech to NZ$1.0225, near session highs.”
“Besides India and Australia, that are unchanged, all other equity indices are in the green today, but the gains are moderate, on average +0.3% around the region.”
“Most commodities are unchanged, but iron ore continues its recovery, +1.5% today.”