Free Trial
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.
MARKET INSIGHT
Correlations between NZ and Australia CPI measures are high at the moment, across both headline and core measures. Whilst correlation doesn’t imply causation, given Australia has been experiencing similar cost pressures to NZ, the elevated NZ Q3 CPI outcome increases the risk of a strong Q3 Australian CPI result too, which prints next Wednesday.
- Whether or not this can shift RBA market expectations remains to be seen. The RBA is already forecasting strong inflation outcomes into year end. Presumably next week’s result will need to be strong enough for that outlook, coupled with easing momentum forecast into the middle of next year, to be under threat.
- Current market pricing has roughly 25bps priced at each of the next three meetings, with ~145bp of cumulative tightening priced through to the end of the current cycle (based on futures). The RBNZ has been well ahead of the RBA in this tightening cycle though and current market pricing expects that to remain the case.
- Full the full piece, see here:AU and NZ CPI (Oct 19) final.pdf
Figure 1: Core CPI y/y%
Source: MNI - Market News/Refinitiv
*NZ core CPI is the RBNZ's Sectoral Factor Model and for Australia it is the CPI ex volatile items
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.
We are facing technical issues, please contact our team.
ok
Your request was sent sucessfully! Our team will contact you soon.
ok