govt/rbnz changes no sweat for broad eco view nz real gdp · 2018-01-15 · govt/rbnz changes no...

15 January 2018

bnz.co.nz/research

Markets Outlook RESEARCH

2018: The More Things Change…

Govt/RBNZ changes no sweat for broad eco view

Tuesday’s QSBO to exhibit post-election grump

CPI track stifled by Stats NZ re-weighting

But housing inflation looks to be re-heating

Recent rain warmly welcomed…by farmers

NZD up on solidifying global optimism

We still pitch OCR increases starting H2 2018

In spite of all that has changed, and is changing, we

haven’t really altered our forecasts of the NZ economy,

from a broad perspective. As such, they remain relatively

upbeat. The new government’s policies will probably

affect the composition of growth more than its overall

rate, while “supporting” inflation from the bottom up.

We also see the personnel and mandate changes

afoot at the Reserve Bank as scant cause to amend

our broad macro view. So we still envisage pressure

will come on the RBNZ to start lifting its policy rate

later on this year.

From a GDP perspective, we forecast real growth of 2.9%

for calendar 2018 and the same for 2019. This is after

estimated growth of 2.9% for 2017 – and expansions in

2015 and 2016 of 3.5% and 4.0% respectively – each

1.0% stronger after Statistics NZ’s recent annual revisions.

2.9% growth in prospect should be enough to hold the

unemployment rate below 5%, as net inward migration

is slow to abate.

However, there will probably be some near-term chop to

get through. Specifically, we think the NZ economy, ran a

bit slow late last year and will continue to do so in the

March quarter of this year. This relates to the recent

election cycle and result, especially with respect to the

business sector.

Steady As She Goes

Expect A Sag

A cautionary tone is certainly what we anticipate for

tomorrow’s NZIER Quarterly Survey of Business Survey

(QSBO). Indeed, we expect it to sag quite a bit, in line with

what the monthly ANZ business survey has done since

September. The only question is, by how much? But

unless the QSBO is predominantly negative, we’ll largely

look through it as having elements of over-reaction to the

new centre-left government.

In the least, the QSBO might hold up better than the ANZ

survey given 1) it doesn’t directly survey farmers (and

agriculture provided the biggest drag in December’s ANZ

business survey) and 2) the QSBO has a relatively nearer-

term focus than the ANZ survey does. And a look at

November’s PMI and PSI readings suggest economic

activity was holding together just fine, just after the

election. We’ll get an update on the PMI this Friday.

As for the QSBO’s inflation gauges, however, these

appear prone to remain firm, even strengthen a bit

(if the ANZ survey is any guide).

Even so, it’s not clear that the headline CPI track itself

will sustain pressure on the RBNZ to hike its cash rate.

To be sure, we expect annual CPI inflation of 1.9% for

Q4 (lower than the 2.0% we previously anticipated, as a

consequence of the new CPI weights that Statistics NZ

announced last Friday – meaning a higher weight on

falling food prices and a lower weight on rebounding

fuel prices). In its November Monetary Policy Statement

(MPS) the RBNZ forecast annual CPI inflation of 1.8%

for Q4 2017.

As it turned out, this morning’s December Food Price

Index had no impact on our CPI track. It fell 0.8%, exactly

as we expected.

-2

-1

0

1

2

3

4

5

6

7

8

Jun-88 Jun-91 Jun-94 Jun-97 Jun-00 Jun-03 Jun-06 Jun-09 Jun-12 Jun-15 Jun-18

Ann avg% growth

NZ Real GDP

Before annual revisions byStats NZ

After annual revisions byStats NZ

Source: Statistics NZ, BNZ Quarterly

BNZ forecasts

-50

-40

-30

-20

-10

0

10

20

30

40

50

60

1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017

net % whoare positive

Monthly

Business Activity

Source: ANZ, NZIER, BNZ

QSBO, 3 month outlook

ANZ business survey, 12 month outlook

Markets Outlook 15 January 2018

bnz.co.nz/research

Getting There

But also be aware that our CPI inflation forecasts

undershoot those of the Bank’s, starting Q2 this year

and into early 2019. In particular, we expect 1.5% for the

year to June 2018, whereas the November MPS forecast

2.1%. Of course, the medium-term view on CPI inflation,

and trends in core inflation, should over-ride this, in

recommending a start to normalising the Official Cash

Rate from its record low. Threats of serious disinflation

have surely passed. Nonetheless, if we’re closer to the

truth on headline CPI inflation for the next while, then the

Reserve Bank might find further excuse to delay any

tightening it envisages.

This is especially if GDP growth proves a bit under

par over the immediate term, as we also think is the

likelihood. November’s MPS expected GDP growth of

0.9% for Q4 2017 and 1.2% for Q1 2018. We are looking

for 0.5% for each.

Commodity price updates for this week come in the

form of Wednesday morning’s Global Dairy Trade auction

and the afternoon’s ANZ commodity export prices for

December. While December’s indices appear mixed, we

are leaning to a further increase for the auction (after the

2.2% bounce in prices at the 3 January event). Whole-milk

powder futures are up, as are oil prices, while the US

dollar is down. Also, Fonterra recently announced a

reduction in its tonnage on offer.

Having said this, the country has had decent rains over

recent weeks – well most of it anyway. This has alleviated

the threat from the very dry conditions that prevailed

into the end of 2017. Certainly, a lot of farmers will be

breathing easier (although it seems the hydro lakes

down south could still do with more rain).

As well as the weather, we’ll be looking out for

December’s housing statistics from the Real Estate

Institute. We expect these to be published by the end of

the week. Chances are that they will show a resilient

market, with signs that inflation is far from dead and

buried, along with turnover that’s recovering post the

election. We caught whiff of this from the Auckland-

centric Barfoot and Thompson results for December,

Respite With The New Year Rains

the Quotable Value NZ report for the month and various

other housing data and anecdote.

In keeping with this, November’s building consents

obviously rebounded with some gusto (in figures

published last week), as apartments righted themselves

from a sag in October. Indeed, apartments, along with

townhouses, units and retirement village units, are driving

residential consents now, while those for standalone

houses are tending to level off (after a strong run).

For more indication on late-2017 activity, we expect

tomorrow’s electronic card transactions to increase 0.2%

for December. This would, following their 1.2% spike the

month before, suggest a solid increase in Q4 retail sales,

after their go-slow in Q3.

It’s also worth noting that global growth indicators

continue to go from strength to strength, and in a much

more synchronised fashion. This carries on from a

recovered pace in 2017, after a very patchy and slow

2016. But while this has helped put some starch in global

inflation, it has not pressed it to any strong pace as of yet.

The ongoing improvement in global sentiment this year,

including in world equity markets, has coincided with a bit

of a run-up in the currency so far, albeit most pronounced

against a weakening US dollar. Since we adjourned

just before Christmas the NZ TWI has crept up to 75.0,

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20

Annual % change Consumers Price Index

RBNZNovember

MPS

BNZ

Source: RBNZ, Statistics NZ, BNZ

Target low

Quarterly

Target peak

Forecasts

Target mid-point


bnz.co.nz/research

from around 74.0. We expect it to peter off as the year

progresses. However, for the moment, the exchange rate

reinforces the cap we see on local CPI inflation, relative to

RBNZ expectations. The November MPS expected the

TWI to flat-line at 73.5.

As for NZ interest rate markets, they still have a stronger,

and sooner, view on OCR hikes than the November

MPS signalled. The market fully prices a 25bp hike by

November and another two by the end of 2019, marking

the policy rate at 2.50% by then. We see the OCR at a

more-normal 3.00% by the end of next year. This is with a

first hike in August, although we appreciate the risk of

delay to this starting point.

Upside, Over Time

[email protected]

0

1

2

3

4

5

6

7

8

9

10

04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20

%

Quarterly

Cash Rate

Source: RBNZ, BNZ

Forecasts

BNZ

Nov 2017 RBNZ MPS


bnz.co.nz/research

Global Watch

Australian labour data expected robust

US has Fed speaker and bank reporting season

China GDP growth expected at solid 6.7%

Australia

Aussie data flow picks up this week with Employment

data on Thursday. There is also plenty of second-tier data,

with the pick being Monthly Consumer Confidence on

Wednesday. Other second-tier pieces include the MI

Inflation Gauge on Monday, Housing Finance on

Wednesday and Inflation Expectations on Thursday.

For Employment, Australia’s longest run of job creation

since 1994 is set to continue with the market expecting

+15k jobs m/m in December. NAB sees upside risks to

this given solid job advertising trends on SEEK and by

our own NAB Business Survey in November and are

forecasting a bumper +35k employment print. For the

unemployment rate, NAB and the market expect this to

|be unchanged at 5.4%.

Sample rotation also seems to favor a strong print this

month with the outgoing 1/8 of the sample having a lower

tendency to be employed compared to the sample as a

whole (employment to population ratio 61.8% compared

to total sample 62.1%). If the incoming 1/8 is more in line

with the existing sample then rotation alone could

potentially add 10-15k jobs in the month.

A Very Strong Labour Market In 2017

While NAB expects an unchanged unemployment rate

for this month, the trend is firmly lower in 2018. Trend

employment growth currently exceeds the level needed to

keep the unemployment rate unchanged and at +22k is

enough for it drop 0.1 every 2-3 months. The most recent

employment indicators suggest it could fall below the

RBA’s 5% NAIRU in 2018 – Job Vacancies this week

were very strong. Our view of a continuing strong labour

market is part of the reason why NAB sees the

RBA hiking rates twice in the second half of 2018.

As for the second-tier data, Monthly Consumer

Confidence on Wednesday could be interesting to see

whether the more buoyant mood from consumers

continued into 2018. The strong labour market has no

doubt helped to lift confidence and unemployment

expectations amongst consumers are now at their lowest

since May 2012. It is also worth noting here the previous

divergence between Consumer and Business confidence

has now almost closed.

Labour Market To Get Even Stronger In 2018

Consumers Becoming More Bouyant

MI suggests inflation was building in Dec


bnz.co.nz/research

Other second-tier data pieces include the MI Monthly

Inflation Guage on Monday, Housing Finance on

Wednesday (0.0% m/m expected) and Inflation

Expectations on Thursday. The Inflation Gauge may be

worth paying attention to ahead of the official ABS Q4

CPI on Wednesday 31 January – the Gauge suggests

inflation pressures were building in Q4.

Market focus

A new section in the What to Watch that looks at one

interesting market development that is set to intrigue

analysts in the week ahead.

As analysts we’ll be watching whether there is a decisive

break in US Treasury yields that signals the end of the

bond bull market and the beginning of a bear market.

The 10-year Treasury is sitting at 2.57% - bang on line

with its ten year average.

A Bear Market For Bonds? – Not Yet Clear

China

Q4 GDP on Thursday would normally be the main item,

though there may be less of a reaction to it following

Premier Li’s comments that GDP growth was about 6.9%

in 2017 – note consensus which predates the comments

sits at 6.8% for the YTD. Given that, more interest is likely

to be on the monthly trio of Retail Sales, Fixed Assets and

Industrial Production – all expected to be similar to last

month’s growth rates.

US

A quiet week start to the week with Monday being a

Federal Holiday (Martin Luther King; bond/equity markets

are closed). While quiet, markets will be digesting the

latest moves in yields following the stronger than

expected core CPI print. Datawise the main pieces are

Industrial Production on Wednesday (0.3% expected)

and the Uni Mich. Consumer Sentiment Report on Friday

(97.0 expected). There are also a number of regional

manufacturing indices, including the NY Empire on

Tuesday and the Philly Fed on Wednesday.

The Fed also releases its Beige Book on Wednesday,

while Fed speak continues with non-voters Harker,

Rosengren, Evans and voter Mester on the circuit.

Bank profit reporting season continues with Citigroup

(Tuesday), Goldman’s, BoAML (Wednesday) and Morgan

Stanley (Thursday). Finally, Friday 19 looms as the

deadline for a possible government shutdown – likely to

be averted with a temporary funding agreement.

Canada

A likely rate hike by the Bank of Canada on Wednesday a

main focal point for markets. Around 78% of economists

expect a hike and markets are 85% priced having moving

sharply on last week’s employment data where the

unemployment rate fell to 5.7% - the lowest since 1974

and well below most estimates of the NAIRU. Given the

rapid improvement in the economy in 2017, three hikes

in total are priced for 2018.

Eurozone

A quiet week ahead with only the final version of the CPI

on Wednesday. Europe also has Trade Balance data on

Monday. Key ECB speakers include Weidmann on

Saturday, Nowotny on Wednesday and Coeure on Friday.

For markets, the Euro will be the focus as it makes three

year highs.

UK

An important week with CPI on Tuesday and Retail Sales

on Friday. For CPI the market is looking for the y/y rate to

have finally peaked and is forecasting Headline at 3.0% y/y

and Core at 2.6% y/y.

Japan

An industrial focus with Machine Tool Orders Monday,

Core Machine Orders on Wednesday and Industrial

Production on Thursday

[email protected]

mailto:[email protected]


bnz.co.nz/research

Fixed Interest Market

Reuters: BNZL, BNZM Bloomberg:BNZ

So far this year, New Zealand has largely been tracking

what’s been going on in offshore fixed interest markets.

US Treasury yields breached the psychologically important

2.50% level last week, their highest level since March and

within proximity of 3 year highs. NZ longer-term rates have

risen in sympathy with those offshore while the 2 year

swap rate has been reasonably sticky around 2.20%.

The rise in US yields to start the year has been driven by

a combination of factors. Stronger global growth has

seen expectations grow that central banks will dial back

emergency monetary policy settings. The ECB minutes

highlighted the central bank might change its guidance

around QE in the coming months – probably to end QE in

September – while the BoJ’s reduction in its longer-term

purchases of JGBs caused some to speculate the BoJ

may likewise reduce stimulus this year (we are doubtful

of the latter). Meanwhile, higher commodity prices and a

better than expected US core CPI release on Friday have

seen market expectations of inflation pick up somewhat.

The market-implied probability of a March hike now sits

above 80% with close to 2½ rate rises priced for 2018.

New Zealand longer-term rates have risen in sympathy

with those offshore. The 10 year NZ swap rate is up 7bps

so far this year while the 10 year NZGB is up around

12bps. The spread between NZ and US government bond

yields has stabilised near the tightest levels seen since

the mid-1990s. As we discussed last week, we expect

longer-term NZGB yields to rise this year alongside those

of US Treasuries, in part to retain demand from foreign

investors. We would see any declines in NZ rates towards

their year-to-date lows as an opportunity to lighten up on

duration and for corporates to put hedges in place.

The DMO resumes NZGB tenders this Thursday after a

month-long pause, with $200m 2025 maturity bonds to be

issued. The seasonal pause in issuance from the DMO

alongside the maturity of the Dec17 NZGB in mid-

December contributed to a sharp decline in NZGB yields

and widening of swap spreads into year-end. These

moves have partially retraced this year (the 2023 NZGB

is up 15bps in yield), although with a number of NZGBs

trading special in repo – implying the market is short – the

2025 tender should go reasonably well.

While NZGB supply has been on hold so far this year,

there have been a number of Kauri bond issues from

supranationals to fill the supply void. Asian Development

Bank, IADB and NIB have together issued over $1bn so

far this year, all in the 5 year maturity.

The short-end of the NZ swap curve has remained

subdued, despite the relatively large moves seen offshore

and in NZGBs. The 2 year swap rate has traded a 7bp

range in 2018 and is currently at 2.21%, close to where it

ended last year. While the market has firmed up its pricing

of rate rises by the Fed, it remains sceptical the RBNZ will

be tightening in the first half of this year.

Looking to the week ahead, the local data calendar is

reasonably sparse, with the highlight being the QSBO

released tomorrow. The next major economic data release

in NZ is CPI, which comes out on 25th January; we expect

a 0.4% increase for the quarter which would take the

annual rate to 1.9%. We expect the 2 year swap rate to

remain range-bound between 2.15% - 2.25% until then.

Offshore, there isn’t much major economic data either

although it’s possible the market could still challenge the

2017 highs in the 10-year US Treasury yield of 2.63%.

The major event offshore is the Bank of Canada’s rate

decision, where it is expected to raise rates for a third

time this cycle. With the rate rise almost fully-priced, the

market’s focus will be on the accompanying statement

and any comments from the Governor about the potential

for further rate rises this year. There’s no automatic read-

across from BoC hikes to the RBNZ, but it does reinforce

the backdrop of an improving global economy and more

central banks shifting towards tightening monetary policy.

NZ-US bond spreads at tightest level since 1990s

-1

0

1

2

3

4

5

6

7

-1

0

1

2

3

4

5

6

7

1990 1994 1998 2002 2006 2010 2014 2018

NZ-US 10 year NZ-US 5 year OCR-Fed funds rate spread

Source: Bloomberg

% %

Current Rates/Spreads and Recent Ranges

Current Last 3 -weeks range*

NZ 90d bank bills (%) 1.88 1.87 - 1.89

NZ 2yr swap (%) 2.23 2.17 - 2.25

NZ 5yr swap (%) 2.73 2.65 - 2.73

NZ 10yr swap (%) 3.24 3.11 - 3.24

2s10s swap curve (bps) 101 92 - 101

NZ 10yr swap-govt (bps) 37 33 - 43

NZ 10yr govt (%) 2.87 2.72 - 2.89

US 10yr govt (%) 2.55 2.40 - 2.60

NZ-US 10yr (bps) 32 27 - 33

NZ-AU 2yr swap (bps) 19 17 - 21

NZ-AU 10yr govt (bps) 9 3 - 15

*Indicative range over last 3 weeks

[email protected]

https://www.bnz.co.nz/assets/markets/research/20180112-NZGB-yields-to-go-higher-this-year-lighten-up-on-duration.pdf


bnz.co.nz/research

Foreign Exchange Markets

Reuters pg BNZWFWDS Bloomberg pg BNZ9

The NZD ended last year on a strong note and has begun

2018 in a similar fashion. Over the past month, the NZD

has been one of the best performing major currencies

(+4%), beaten only by the Scandinavian currencies.

The backdrop for this move has been a step-up in risk

appetite, with our index reaching its highest level since

mid-2014. Investors appear optimistic about the economic

outlook ahead, with indicators pointing to the best global

growth conditions in more than six years, supporting

commodity currencies like the NZD.

The NZD’s recent strong recovery represents a bit of a

catch-up from last year’s overall underperformance.

Last year the NZD traded mostly below our short term

fair value model estimate. The strong rally over the past

month sees the NZD up through fair value, albeit only just,

less than 1% above the current model estimate of 0.7190.

Net speculative positioning data shows that a short

squeeze might have contributed to some NZD strength.

Positioning late last year and early this year was notably

short, providing a low hurdle for an NZD recovery.

Data through to the week ending 9 January shows some

closing of short positions, but overall positioning remains

unusually short. Technical indicators put the first area of

resistance at 0.7370 while the relative strength indicator

already suggests that the NZD is well into over-bought

territory. Our view is that the NZD recovery is likely to

soon run out of steam.

Our fundamental view on the NZD hasn’t changed.

From the current level the balance of risk is skewed to

the downside for the NZD, notwithstanding the possibility

of a further near-term short squeeze. The year ahead is

expected to show global growth flattening out, a less

favourable terms of trade environment for the NZD and

global policy rates heading higher. These fundamental

forces represent headwinds for the NZD in the year ahead.

In the week ahead the local economic dataflow begins for

the year. On paper, tomorrow’s quarterly survey of

business opinion is the key release, but the expected

plunge in many indicators should be ignored, simply

reflecting the survey picking up the formation of the new

government since the previous quarterly survey – some

negative headlines for sure, but not particularly

meaningful.

Reduced dairy volumes (owing to drought conditions in

some areas) offered at the GDT dairy auction should help

support dairy prices. The first auction early in the New

Year when most were still on holiday showed a modest

recovery in pricing after the slump towards the end of

last year.

On the global scene we’ll be interested in whether the

Bank of Canada hikes rates for the third time this cycle

(Thursday morning NZT). The market is pricing an 85%

chance of a 25bp hike but just as important will be the

commentary which will help guide expectations for further

possible moves. A dovish hike, for example, wouldn’t

necessarily support the CAD. Ultimately we see the global

policy rate environment as negative for the NZD to the

extent that rising global rates dent the outlook for global

growth and risk appetite.

The US economic scene is fairly quiet, while elsewhere

China’s data dump of real activity indicators and Australian

employment data both due Thursday offer some scope for

action in commodity currencies.

Last Friday we saw renewed strength in EUR and GBP

resulting in these NZD crosses falling 1.5% on the day.

For the year ahead EUR and GBP are our preferred

currencies, and this sees these NZD crosses fall through

the year, with mid-year targets of EUR 0.56 and GBP 0.48.

Risk Appetite Up to a Multi-Year High

[email protected]

10%

20%

30%

40%

50%

60%

70%

80%

90%

2011 2012 2013 2014 2015 2016 2017 2018

BNZ Risk Appetite Index

Source: BNZ, Bloomberg

Cross Rates and Model Estimates

Current Last 3 -weeks range*

NZD/USD 0.7252 0.7000 - 0.7280

NZD/AUD 0.9172 0.9050 - 0.9220

NZD/GBP 0.5279 0.5180 - 0.5370

NZD/EUR 0.5945 0.5870 - 0.6050

NZD/JPY 80.57 78.50 - 81.30

*Indicative range over last 3 weeks, rounded figures

BNZ Short-term Fair Value Models

Model Est. Actual /FV

NZD/USD 0.7190 1%

NZD/AUD 0.9030 2%


bnz.co.nz/research

Technicals

NZD/USD

Outlook: Trading range

ST Resistance: 0.7370 (ahead of 0.7430)

ST Support: 0.7115 (ahead of 0.7055)

The strong NZD recovery since mid-December has seen

previous resistance levels broken one by one. We see the

next area of resistance around 0.7370. There is weak

support around the 200-day moving average of 0.7115.

NZD/AUD

Outlook: Trading range

ST Resistance: 0.9230 (ahead of 0.9400)

ST Support: 0.9035 (ahead of 0.8975)

Resistance is at 0.9230 which matches both the 200-day

moving average and resistance levels in place since

September. The first area of weak support kicks in

around 0.9035.

[email protected]

NZ 5-year Swap Rate

Outlook: Neutral

ST Resistance: 2.73

ST Support: 2.45

Market breaking higher. Break confirmed should we close

above 2.73.

NZ 2-year - 5-year Swap Spread (yield curve)

Outlook: Neutral

ST Resistance: +53

ST Support: +46

Ranges becoming quite tight. Trade a break of trendlines.

[email protected]

NZD/USD – Daily

Source: Bloomberg

NZD/AUD – Daily

Source: Bloomberg

NZ 5-yr Swap – Daily

Source: Bloomberg

NZ 2yr 5yrSwap Spread – Daily

Source: Bloomberg


bnz.co.nz/research

Key Upcoming Events

Forecast Median Last Forecast Median Last

Monday 15 January

NZ, Food Price Index, December -0.4%

NZ, (pending) REINZ Housing Data, December

Aus, Inflation Gauge (Melbourne Institute), Dec y/y +2.7%

Euro, Trade Balance, November s.a. +€22.3b +€19.0b

US, Leading Indicator, December +0.4%

US, Holiday (obs), Martin L King Jnr

Tuesday 16 January

NZ, QSBO, Q3 +18

NZ, Electronic Card Transactions, Dec +0.2% +0.5% +1.4%

Jpn, Tertiary Industry Index, November +0.3% +0.3%

Germ, CPI, Dec y/y 2nd est +1.7% +1.7%P

UK, CPI, December y/y +3.0% +3.1%

US, Empire Manufacturing, January +19.0 +18.0

Wednesday 17 January

NZ, ANZ Commodity Prices (world), December -0.9%

NZ, Dairy Auction, GDT Price Index +2.2%

Aus, Housing Finance, November -1.0% flat -0.6%

Aus, Consumer Sentiment - Wpac, January 103.3

Jpn, Machinery Orders, November -1.2% +5.0%

Euro, CPI, Dec y/y 1st est +1.4% +1.4%P

US, NAHB Housing Index, January 72 74

Wednesday 17 January…continued

US, Industrial Production, December +0.4% +0.2%

US, Fed's Evans/Kaplan/Mester Speak, Monetary Policy

US, Beige Book

Thursday 18 January

Aus, Unemployment Rate, December 5.4% 5.4% 5.4%

Aus, Employment, December +35k +15k +62k

China, GDP, Q3 y/y +6.7% +6.8%

China, Property Prices, December

Euro, ECB's Weidmann/Coeure Speak

US, Housing Starts, December 1,290k 1,297k

US, Philly Fed Index, January +24.0 +27.9

Can, BOC Policy Announcement 1.25% 1.00%

Friday 19 January

NZ, BNZ PMI (Manufacturing), December 57.7

China, Industrial Production, Dec y/y +6.1% +6.1%

China, Retail Sales, Dec y/y +10.2% +10.2%

Germ, PPI, Dec y/y +2.3% +2.5%

UK, Retail Sales vol., December -0.9% +1.1%

US, Mich Cons Confidence, January 1st est 97.0 95.9

Monday 22 January

NZ, Holiday - partial, Wellington Anniv.

Historical Data

Today Week Ago Month Ago Year Ago Today Week Ago Month Ago Year Ago

CASH & BANK BILLS

Call 1.75 1.75 1.75 1.75

1mth 1.78 1.79 1.77 1.84

2mth 1.83 1.83 1.82 1.92

3mth 1.87 1.87 1.86 1.99

6mth 1.90 1.91 1.91 2.05

GOVERNMENT STOCK

03/19 1.78 1.78 1.78 2.19

04/20 1.95 1.95 1.93 2.39

05/21 2.13 2.12 2.08 2.55

04/23 2.39 2.38 2.31 2.80

04/25 2.66 2.63 2.57 3.06

04/27 2.85 2.81 2.71 3.14

04/33 3.17 3.12 3.04 3.48

04/37 3.32 3.26 3.24 3.80

GLOBAL CREDIT INDICES (ITRXX)

Australia 5Y 53 53 62 98

Nth America 5Y 47 45 50 66

Europe 5Y 44 44 47 69

SWAP RATES

2 years 2.22 2.18 2.19 2.40

3 years 2.41 2.36 2.36 2.62

4 years 2.57 2.51 2.50 2.80

5 years 2.72 2.66 2.64 2.94

10 years 3.21 3.13 3.10 3.40

FOREIGN EXCHANGE

NZD/USD 0.7252 0.7176 0.6995 0.7103

NZD/AUD 0.9168 0.9151 0.9126 0.9500

NZD/JPY 80.55 81.16 78.72 81.12

NZD/EUR 0.5944 0.5995 0.5937 0.6700

NZD/GBP 0.5278 0.5288 0.5227 0.5897

NZD/CAD 0.9039 0.8913 0.8997 0.9359

TWI 75.1 74.8 74.1 78.3


bnz.co.nz/research

Stephen Toplis

Head of Research

+64 4 474 6905

Nick Smyth Interest Rates Strategist

+64 4 924 7653

Craig Ebert

Senior Economist

+64 4 474 6799

Doug Steel Senior Economist

+64 4 474 6923

Jason Wong Senior Markets Strategist

+64 4 924 7652

Main Offices

Wellington Level 4, Spark Central

42-52 Willis Street

Private Bag 39806

Wellington Mail Centre

Lower Hutt 5045

New Zealand

Toll Free: 0800 283 269

Auckland 80 Queen Street

Private Bag 92208

Auckland 1142

New Zealand

Toll Free: 0800 283 269

Christchurch 111 Cashel Street

Christchurch 8011

New Zealand

Toll Free: 0800 854 854

National Australia Bank

Peter Jolly

Global Head of Research

+61 2 9237 1406

Alan Oster

Group Chief Economist

+61 3 8634 2927

Ray Attrill

Head of FX Strategy

+61 2 9237 1848

Skye Masters

Head of Fixed Income Research

+61 2 9295 1196

Wellington

Foreign Exchange +800 642 222

Fixed Income/Derivatives +800 283 269

New York

Foreign Exchange +1 212 916 9631

Fixed Income/Derivatives +1 212 916 9677

Sydney



Hong Kong



London



Contact Details

ANALYST DISCLAIMER: The person or persons named as the author(s) of this report hereby certify that the views expressed in the research report accurately reflect their personal views about the subject

securities and issuers and other subject matters discussed. No part of their compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in the research

report. Research analysts responsible for this report receive compensation based upon, among other factors, the overall profitability of the Markets Division of National Australia Bank Limited, a member of

the National Australia Bank Group (“NAB”). The views of the author(s) do not necessarily reflect the views of NAB and are subject to change without notice. NAB may receive fees for banking services

provided to an issuer of securities mentioned in this report. NAB, its affiliates and their respective officers, and employees, including persons involved in the preparation or issuance of this report (subject to

the policies of NAB), may also from time to time maintain a long or short position in, or purchase or sell a position in, hold or act as advisors, brokers or commercial bankers in relation to the securities (or

related securities and financial instruments), of companies mentioned in this report. NAB or its affiliates may engage in these transactions in a manner that is inconsistent with or contrary to any

recommendations made in this report.

NEW ZEALAND DISCLAIMER: This publication has been provided for general information only. Although every effort has been made to ensure this publication is accurate the contents should not be relied

upon or used as a basis for entering into any products described in this publication. Bank of New Zealand strongly recommends readers seek independent legal/financial advice prior to acting in relation to any

of the matters discussed in this publication. Neither Bank of New Zealand nor any person involved in this publication accepts any liability for any loss or damage whatsoever may directly or indirectly result

from any advice, opinion, information, representation or omission, whether negligent or otherwise, contained in this publication.

US DISCLAIMER: If this document is distributed in the United States, such distribution is by nabSecurities, LLC. This document is not intended as an offer or solicitation for the purchase or sale of any

securities, financial instrument or product or to provide financial services. It is not the intention of nabSecurities to create legal relations on the basis of information provided herein.

National Australia Bank Limited is not a registered bank in New Zealand.

govt/rbnz changes no sweat for broad eco view nz real gdp · 2018-01-15 · govt/rbnz changes no...

Documents