Moving to the next stage
The global unwind of the policy stimulus is underway. Japan signaled an end to their (modest) quantitative easing last week and Norway raised their interest rates. We get to learn where US, Eurozone and UK central banks are at this week, and just how aggressive the RBA intends to be. A 0.25% rate hike by the RBA is likely but the others are more likely to forewarn of tightening rather than act now.
Markets have already signaled their unease with the stimulus unwind, the S&P500 down 4% last week being noteworthy. No doubt there will remain some too-ing and fro-ing as people balance the conflicting forces of economic recovery and stimulus removal but it does appear we have moved beyond the goldilocks period. The new stage need not necessarily bring a downward bias to share prices and the NZD but it is likely to involve more downward moves than has been apparent for several months.
