During the month, the US Federal Reserve (Fed) lowered interest rates by 0.5% due to weaker economic data, which included modest growth in non- farm jobs and a limited number of job openings. This indicates that inflation is getting under control, which is good for the economy. Other countries, like Canada and China, are also easing their monetary policies. Canada cut rates for the third time in a row, while China is implementing a large stimulus package to boost its economy. The European Central Bank also resumed its easing cycle with a 0.25% cut after a pause.

For investors, the US is crucial because it is the largest economy in the world, and changes in its interest rates largely influence global markets. Canada is important as it is a major trading partner with the US, and its economic health can influence investments in North America. Stimulus measures in China led to increased market activity, as the world’s second largest economy remains a key player in global economic trends.

Also, during the month, NZ bond yields continued to fall. Falling bond yields mean that bond prices are rising, for investors, this can indicate that the market expects interest rates to drop further, which often happens when central banks, like the Reserve Bank of New Zealand (RBNZ), are likely to cut rates. In this case, the 10-year bond yield fell to 3.9%, suggesting that investors are anticipating bond prices to increase in the future.

Regarding the performance of the New Zealand Dollar (NZD), its strength against the US Dollar (up 1.7%) is significant. This means that the NZD is gaining value compared to the USD, which can benefit New Zealand's economy by making exports cheaper for foreign buyers. The NZD’s gains were influenced by the weakness of the USD, largely due to the Federal Reserve's rate cut. Additionally, the strength of the Chinese yuan, driven by stimulus measures, can also impact New Zealand's trade and investment landscape.

Significant developments for September:

•  The Fed started lowering interest rates with a 0.5% cut, citing a strong US economy and progress on inflation. However, they warned that ongoing inflation could slow down future cuts.
• The Chinese Government introduced a broad set of measures to boost its struggling economy. Among other things, these measures included decreasing the reserve requirement ratio of banks, cutting the country’s 7-day repurchase rate by 0.2%, and implementing a 0.5% cut to the interest rate on existing mortgages.
• The conflict in the Middle East intensified as Israel launched further strikes against Lebanese group Hezbollah. Israel targeted the group’s senior leadership, with strikes in the Lebanese city of Beirut resulting in the death of leader Nasrallah Hassan.