Wednesday's Market Minute: Interest Rate Ambush

Doves seem to be taking flight in global markets, as a surprise half-percent interest rate cut from Reserve Bank of New Zealand has caused upheaval for the currency. Kiwi Dollar futures are getting crushed this morning on the news, with the contract continuing a more than 5% slide downward since July 19.

The news comes at the same time as larger-than-expected cuts from India and Thailand as well, not to mention the rate cut from its neighbor Australia last month amid weakening economic data and slowing demand around the globe.

All this is happening against the backdrop of the U.S. Federal Reserve announcing a rate cut for the first time since 2008, with President Trump pressuring for even further reductions. Troubled U.S./China trade negotiations aren’t helping matters, either. S&P futures showed a modest bounce yesterday, but they’re resuming their slide once again this morning. The all-time highs on July 26 feel like a distant memory with the contract now down over 6% since then, and the 10-year Yield has plummeted to its lowest level in almost three years.

This is a time for traders to be cautious and make sure they’re managing risk properly, as things could continue to get ugly.

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