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MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
STIR
RBNZ dated OIS has firmed 13bp across meetings today in line with global STIR developments overnight. The ECB’s decision to go through with a 50bp hike despite global banking concerns supported the STIR re-pricing.
- RBNZ dated OIS pricing shows April meeting back at 28bp of tightening with terminal OCR expectations at 5.32%.
Figure 1: RBNZ Dated OIS: Today Vs. Yesterday
Source: MNI – Market News / Bloomberg
- The willingness of NZ STIR to price a 25bp hike for April versus no change in AU STIR is noteworthy particularly given the data this week has been strong in Australia and weak in NZ.
- In Australia, NAB business conditions and employment both surprised on the upside whereas weaker-than-expected Q4 NZ GDP put the economy on recession watch.
- While GDP data (-0.6% Q/Q) was weaker than analysts expected, it was much weaker than the RBNZ’s forecast of +0.7% Q/Q. On the surface, the data supported a tightening pause in April, but that assessment would have ignored recent volatility in GDP data.
- Market pricing suggests the RBNZ is likely to want clearer signals that it has done enough in its fight against capacity constraints and inflation before halting tightening.
- The RBNZ’s recent performance as an overshooter of OIS forward pricing (Figure 2) appears to have put weight behind its hawkish rhetoric since its February MPS.
Figure 2: RBNZ OCR Vs. OIS 6M1M (led 6M)
Source: MNI – Market News / Bloomberg
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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