New Zealand Hikes Rates!

November 23, 2022

* currencies & metals gain little on Tuesday

* Adam Sandler drops by the Pfennig today… 

Good Day… And a Wonderful Wednesday to one and all! Well, I told you Monday in my brief, Pfennig that it would be the only letter of the week… But my eye settled down, I can see again… Just a reminder that I only have one eye, so when that one’s on the fritz, I am too! Went to see my Primary Care Physician yesterday, Blood sugar is good, cholesterol, is good, BP is wonderful, lungs were clear… He is always surprised to see me in such good spirits. The first time I ever say him, he walked into the exam room and the look of shock on his face was priceless. He told me that he had been reading my medical history, and had in his mind a broken old man, and instead he saw me smiling at him! I told him, see you can’t believe everything you read! HA! He also told me that he too had experienced the same head cold / sinus problem that I had… But thought I was nearing the end of the ailment… Jack Jezzro and friends, from his Bossa Nova Christmas album play: Let It Snow for me this morning… I love this CD…

The dollar didn’t do much yesterday, while I was being stuck twice because they couldn’t find a vein, OUCH! The BBDXY was up 2 index points at the end of the day. It’s pretty interesting that on a day after a big gain in the dollar that it can’t follow up on that. Hmmm… Gold found a way to gain $1.70 on the day and finish at $1,740.90, and Silver gained 23-cents to move back above $21, and finish at $21.17… The price of Oil had gone south by a large margin before yesterday… The price of Oil had fallen to $78, but recovered a bit yesterday ending the day at $81… And investors are still buying the 10-year thinking they are locking in 10-year high yields… I can’t help but think they are so wrong that they are almost right… I also can’t help but think that yields will go higher, as the Fed Heads continue to hike rates…

Speaking of hiking rates, The Reserve Bank of New Zealand (RBNZ) hiked their Official Cash Rate (OCR) 75 Basis Points last night, and brought their internal OCR to 4.25%… That’s higher than the U.S.’s internal rate of 4.00%… In the old days, that would have brought on huge swaps of bonds from Treasuries to Kiwi Gov’t Bonds… But those days are long gone… I was a part of those days on a bond trading desk… I loved every minute of it, well, except for my arguments with Neil… But those were far in between…

Kiwi did rally on the rate hike news, and it outperformed its kissin’ cousin across the Tasman, the A$… I’ve always held a special place in my heart for kiwi… Many years ago, I was new on the foreign bond trading desk, and I had noticed that kiwi was on the move, and mentioned it to the boys on the desk, and I got a lot of flack about how it was too small a nation to look into… Funny thing, years later, kiwi bonds were the largest holding of foreign bonds that we had… Eventually people get around to hearing me…

In the overnight markets last night, the dollar got sold, along with Oil… The BBDXY has lost 6 index points overnight, and the euro has climbed higher in the 103 handle. Oil lost $4 overnight and trades this morning with a $77 handle. Gold is up barely this morning adding $2 to its value, and Silver is up 20-cents in the early trading today… The big mover overnight was kiwi, with sterling coming in second place… While I like the fact that sterling is stronger, right now, I still can’t get past the idea that the country has a mountain of problems that are being overlooked right now… Oh well, C’est Le Vie…

In other news… Tomorrow is Thanksgiving, and I can’t begin to thank all the dear readers who sent me a note on Monday… I truly appreciated each and every one of them! In Pfennig tradition, here’s Adam Sandler

“ Turkey for me, turkey for you
Let’s eat the turkey in my big brown shoe
Love to eat the turkey at the table
I once saw a movie with Betty Grable

Eat that turkey all night long
50 million Elvis fans can’t be wrong
Turkey lurkey doo and turkey lurkey dap
I eat that turkey, then I take a nap”

I crack up watching and hearing him sing that song… Well, now the Christmas shows will begin… You’ll shoot your eye out kid! Elf, and dozens of others… Bing Crosby and Danny Kaye in White Christmas is a real good one too!

Today’s Data Cupboard will have the Fed Heads Meeting minutes, that the markets will go over with a fine tooth comb to see if there are any hints of a pivot… As adamant as Jay Powell was after the last meeting about this is not the time to pivot, I can’t believe there would be any hints on that, but you never know what those rascally varmints, I mean Fed Heads have to say… We’ll also see Durable and Capital Goods Orders for Rocktober… Both of these have been very weak lately… And with the beauty of being so late with the letter we get to see what the Durable Goods for Rocktober were… They were up a nice 1.0% in Rocktober, and Capital Goods were up .7%.. So, not so weak as previously… Hmmm…

Next week’s Data Cupboard won’t have anything of real economics for us until Wednesday, and then on Friday we’ll see the BLS jobs creation report… or The Jobs Jamboree as I like to call it.

Market Prices 11/23/2022: American Style: A$ .6694, kiwi .6213, C$ .7564, euro 1.0349, sterling 1.2015, Swiss 1.0578, European Style: rand 17.0514, krone 100082, SEK 10.5105, forint 396.31, zloty 4.5432, koruna 23.5409, RUB 60.84, yen 140.20, sing 1.3802, HKD 7.8175, INR 81.85, China 7.1610, peso 19.36, BRL 5.3773, BBDXY 1,278.72, Dollar Index 106.62, Oil $77.67, 10-year 3.71%, Silver $21.37, Platinum $993.00, Palladium $1,1956.00, Copper $3.71, and Gold… $1,743.60

That’s it for today…No FWIW today, I just wasn’t in the mood… But I’ll be back on Monday with a good one, I’m sure, as I’ll have 5 days to work on it! This is a good year, in that all 3 kids will be here, with their families…Andrew & Rachel alternate years with his family and her family… I said, just invite her family here! But noooo, that’s too logical! I rarely see Alex & Grace these days, as both are working full time jobs, and living their life, so it will be good to catch up with them… I need Christmas gifts ideas for the girls in the family… I’ll figure something out, no worries, I just always run into a roadblock with buying for girls… Again, thank you to all who sent me get well/ Happy Thanksgiving messages on Monday… That meant a lot to me, so thank you very much! Jack Jezzro’s Bossa Nova Christmas is still playing, so he’ll take us to the finish line today with his version of the song: Christmas Time Is Here… I hope you have a Wonderful Wednesday, and a Very Happy Thanksgiving tomorrow, and please Be Good To Yourself!

Chuck Butler