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New Zealand’s Flat Yield Curve Signals Weaker Economic Growth

The Sky Tower and buildings in Auckland on Dec. 5.
The Sky Tower and buildings in Auckland on Dec. 5.Photographer: Brendon O'Hagan/Bloomberg

New Zealand’s yield curve has flattened markedly, signaling that the central bank’s tightening cycle is expected to significantly slow economic growth.

The spread between 5-year and 10-year swap rates fell to 1 basis point Monday in Wellington, from 11 points immediately after the Reserve Bank’s rate decision on Nov. 24. The gap was nearly 40 basis points in early October.