NZ Economists Miss Mark Again: Green Shoots or False Promise?

New Zealand economists have been singing the same song for four years now - that green shoots of recovery are finally here. However, their optimism may be misplaced as two significant issues loom large over the economy.

The Reserve Bank of New Zealand Governor Anna Breman and other prominent economists, including those from ANZ, Kiwibank, Westpac, ASB, BMI, BusinessNZ, and S&P Ratings, have all stated that the economic recovery is underway or has resumed. However, their models do not account for the impending Godzilla El Niño.

The current rise in oil prices, exacerbated by the Houthi rebels' seizure of a port in Yemen and Saudi Arabia's cut in oil production, has led to New Zealand bond yields hitting multi-year highs. The 10-year bond yield rose to 5.03%, its highest point since November 2023.

The US Treasury Secretary Scott Bessent's efforts to suppress rates have been thwarted as the influential 30-year Treasury bond hit 5.37%, its highest point since 2007, and the US 10-year gained 11 basis points to 4.95%.