By Kimberly Martin
It was a fairly quiet day across NZ markets. Swap yields closed down around 1bps across the curve.
Heading into this Thursday’s RBNZ meeting the market is pricing almost a 100% probability of a 25bps rate hike.
It also sees the OCR being 200 bps higher in around two years’ time. We forecast 250bps of hikes by this time.
NZ 2 and 5-year swap sit at 3.94% and 4.58% respectively with the 2-10s swap curve at 116bps.
Overnight, in the absence of data flow, and with the standoff in Ukraine no longer dominating news flow, US benchmark yields consolidated around recent levels. US 10-year yields traded between 2.76% and 2.80%.
Today, NZ crown accounts and electronic card transactions will be released.
Across the Tasman the release of the NAB business survey for February has the potential to impact on expectations for RBA activity. The market currently prices less than a 10% chance of a further rate cut from the RBA in the months ahead.
No chart with that title exists.
3 Comments
"The urge to hike rates — the rationale keeps changing, but the demand stays the same — is widespread in the financial press. Why? The ever-changing reasons for a never-changing policy suggest that we aren’t really talking about policy analysis. Instead we’re talking about some mix of class interest (rentiers want their rents) and desire to see economics as a morality play (easy money feels good, therefore it must be bad).
Anyway, quite amazing. And I worry that the incessant drumbeat of demands for rate hikes will eventually wear the central bankers down."
see,
"It also sees the OCR being 200 bps higher in around two years’ time. We forecast 250bps of hikes by this time."
May you live in interesting times.........
Link -
http://krugman.blogs.nytimes.com/2014/03/10/the-rate-hikers-guide-to-th…
regards
And then wait some more — a lot more.
There’s a growing meme in discussions of monetary policy to the effect that we’re actually getting close to full employment, because the long-term unemployed don’t actually count in wage determination. Soon, this story goes, wages will start to rise, and so it’s time to get ready for monetary tightening.
This is a terrible idea."
While US data, NZ is similar...
ie until we start to see actual rises there is no need to panic.
http://krugman.blogs.nytimes.com/2014/03/06/wait-until-wages-start-risi…
regards
and lets do a Sweden ey what.
"The Riksbank raised rates sharply even though inflation was below target and falling, and has only partially reversed the move even though the country is now flirting with Japanese-style deflation. Why? Because it fears a housing bubble."
http://krugman.blogs.nytimes.com/2013/11/23/bubblephobia-and-monetary-p…
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