RBA Hikes, China Trade Data Disappoints

China: The October international trade data overnight was a mixed bag. Imports recovered more than expected (+3.0% y/y, consensus -4.8%), which could suggest that the recent policy easing is supporting domestic demand. But in contrast, exports fell more sharply than anticipated (-6.4% y/y, consensus -3.3%), as tightening financial conditions are restricting demand elsewhere. Overall trade balance weakened, with surplus declining to USD56.5 billion (from USD77.7).

RBA Board Has Responded to Material Increase in Inflation Outlook

As we expected, the RBA Board raised the cash rate target by ¼ percentage point to 4.35%. Their inflation outlook is stronger, and so is their outlook for the labour market. But follow-up increases in rates are far from assured.

Stocks Continue to Climb: Nasdaq's Impressive Winning Streak

The stock market saw modest gains on Monday, building upon the robust rally it experienced last week. The Nasdaq Composite, in particular, achieved its lengthiest positive streak since January, marking a significant milestone for the tech-heavy index.

Australian Dollar Plunges after RBA Hike

The RBA was expected to raise rates today, after holding rates for four straight times. Governor Michelle Bullock duly followed with a quarter-point rate increase, bringing the cash rate to 4.35%. Whenever central banks raise rates, the local currency often rises, but the opposite happened today as the Aussie took a huge drop. At first glance that may seem puzzling, but a close look at the RBA statement can help explain the market reaction.

Stock Markets Ease Further, RBA Hikes After Four-Meeting Hold

Stocks are trading a little lower in Europe on Tuesday and the US is shaping up for a similar open in an hour or so.Lower bond yields enabled stocks to bounce back strongly in the second half of last week, aided by some less hawkish Fed commentary after the meeting and a softer jobs report. But with yields now stabilizing again, equities are also running low on energy and may require another boost from the data or central bank.

Could Surprise Indices Explain Market Movements?

Theory states that the price of financial assets should reflect the underlying economic conditions in the respective region. While this tends to occur from a long-term perspective, a good chunk of the movements occurring in the short-term are dictated by sentiment and the impact of surprises by economic data releases.

Eurozone Recession: Increasingly Possible, But Not Yet Inevitable

The Eurozone has continued to deliver disappointing economic data as Q3 GDP shrank 0.1% quarter-over-quarter, the first decline (outside of the pandemic) since early 2013. With recent activity and survey data remaining soft, the natural question to ask is whether the Eurozone is on the cusp of, or perhaps already in, recession.

NZ First Impressions: RBNZ Survey of Expectations, Q4 2023

Today’s survey was a mixed bag for the RBNZ. Inflation expectations were down at shorter horizons. However, expectations for inflation at longer horizons have picked up and they remain above 2%.

Plenty of ECB, Fed and BoE Governors Will Give Their View

There are again hardly any important data, but plenty of ECB, Fed and BoE governors will give their view. The US Treasury will sell $40 bln of 10-y Notes. Most central bankers probably will hold their view. We look out whether BoE’s Bailey will join the soft assessment of its Chief economist. If so, EUR/GBP might weaken further beyond EUR/GBP 0.87. For EUR/USD, the test of the 1.0764/69 area is rejected for now, but the correction lower only develops in a very gradual way.  

New Zealand Dollar Shrugs as Inflation Expectations Dip

New Zealand’s inflation rate has been dropping, albeit slowly. Inflation fell to 5.6% in the third quarter, down from 6.0% in Q4. The downward trend is certainly encouraging for the Reserve Bank of New Zealand but policy makers are also concerned about inflation expectations and not just the latest inflation numbers.