Australia, NZ dollars defensive as risk rout sparks bond rally
TLT•The Australian and New Zealand dollars weakened against safe-haven currencies as a global share-market rout boosted bonds. Australian 10-year yields fell 10 basis points to 5.164%, while markets priced in a 95% chance the Reserve Bank of New Zealand will raise rates by a quarter point next week to 3.0%.
1. Currencies and bonds
The Australian and New Zealand dollars were on the defensive as a global share-market rout rattled risk assets and investors moved into bonds. Australian 10-year yields fell 10 basis points to 5.164%, while US Treasuries rallied as concerns about AI-related capital needs weighed on technology stocks.
2. Kiwi rate outlook
Markets priced in a 95% chance that the Reserve Bank of New Zealand will raise rates by a quarter point next week to 3.0%, with a peak of 3.75% seen next year. Citi and Westpac analysts shifted their calls to a hike next week; Citi sees rates peaking at 3.0%, while Westpac expects them to reach 4.0% by September next year.
