Summarised by Centrist
In Rabobank strategist Michael Every’s analysis, amidst a slew of global economic events, special attention is drawn to the Reserve Bank of Australia (RBA), but especially the Reserve Bank of New Zealand (RBNZ) as it considers a rate hike despite the country being in a technical recession.
Every says that “a shock rate hike would send ripples right the way round the rest of Western bond markets.”
He writes that the RBA and RBNZ don’t want to raise interest rates, but they might have to. They’re trying to calm down the market, which seems to be working. But if demand for goods and services keeps outpacing what the economy can handle, even with low rates, and the government keeps spending money, they might not have any other options left.
Generally, many want the US Federal Reserve to strike a more dovish tone, says Every.
“In short, markets will be hoping the Fed minutes today don’t look like the RBA and RBNZ versions; and they will be waiting nervously to see if they need to shout “Kiwi, Kiwi, Kiwi! Oy, Oy, Oy!” next week,” he says.
