New Zealand Inverted Yield Curve..

[Trend Fader]

Can someone please explain why there yield curve is so inverted. Every short term bond is higher yield than the longer.

Does this mean they are headed for recession? is there anything special about their financial situation that makes them immune to this ?

http://www.rbnz.govt.nz/statistics/exandint/b2/data-01.html#P231_973

 

[Digs]

I am a kiwi...

All our banks are borrowing from USA to lend to the housing market as there rates a cheaper, and there playing a forex game as well. the NZDUSD cross rate will go back to 0.60 soon they hope. So there short term borrowing is from offshore, no doubt hedged, for long term local lending.

A small country does not have the same rules as USA
ie
Saving rate -12%
Trading deficit 8% GDP

Soon the local economy will suffer as the our country exports are 50% of all goods and NZDUSD at 0.70 is slowly killing us

A safe trade SELL KIWI for 12 months

 

[Trend Fader]

I agree... but the only draw back is when shorting the kiwi against US.. the yield differential still hurts...