Earlier today the financial markets received a bit of a shock when the Reserve Bank of New Zealand surprisingly hiked its interest rate to 0.5%. Investors had expected that the monetary policy meeting of the RBNZ would be uneventful and the rate would be kept at 0.25%.
However, the rate hike did not have a strong impact on the New Zealand dollar, which is currently weaker due to the relatively high risk aversion among investors and the spike in crude oil prices.
Other reports today included an unimpressive construction PMI from the United Kingdom (52.6, a bit below the forecast) and equally disappointing retail sales for August from the eurozone (0% versus a forecast of 0.4%).
Meanwhile, the United States published an upbeat ADP employment change report for September. This is setting the tone positively for the non-farm payrolls which are going to be published on Friday.
In other news, the energy crisis continues to keep investors interested. The spike of demand for natural gas in Europe and the United Kingdom has pushed prices close to 100 euro per megawatt-hour, their highest level in years.
The situation is especially dire in the UK, where there is a shortage of lorry drivers, many of whom used to come from the EU before Brexit was finalized. Now there are not enough employees to drive fuel around the country, making the crisis more pronounced than it is in the EU.
It seems that the energy shortage in Europe is also beginning to affect the United States, where natgas prices are moving up as well.
One prominent effect of the energy crisis at the moment is the increase in bond yields internationally. German and UK bonds have climbed to multi-year highs and US Treasury bond yields are also growing.
As a result, US stock indices are going to trade lower today, thanks to their inverse relationship with bond yields.
