New Zealand cut rates to record low

Yesterday’s markets

11th August 2016

  • USD JOLTS Job Openings: 5.62M
  • USD Crude Oil Inventories: 1.1M
  • NZD Official Cash Rate: 2.00%
  • NZD RBNZ Rate Statement
  • NZD RBNZ Monetary Policy Statement 
  • NZD RBNZ Press Conference
  • NZD RBNZ Gov Wheeler Speaks

After last week saw the Bank of England cut rates and outline further QE, yesterday’s talk was the failed first round of the new asset bond purchases. The BoE’s attempt to purchase £1.17bn worth of gilts fell short and only saw investors offering to sell £1.12bn. This now raises questions on whether the central bank will implement the policy in full. The short fall of £52m has driven prices up and also pushed down the return in yields. This raises concerns that the UK pension industry is tipping into a funding crisis. However, in a statement yesterday from the BoE, they cited that due to the time of the purchasing being in August, liquidity is low due to the holiday season and they expect the next tranche to include the £52m.  

The US gave further insight into their labour market with the release of the JOLTS Job Openings figures, where the report showed job vacancies were up by 110k for June. The reading exceeded markets expectations, showing that the total now stands at 5.62m. From the States, the Oil inventories report saw that firms had unexpectedly stored more oil than forecasted. Once again this shows that the oversupply of oil is still an issue and as such will continue to affect the deeper inflation price issues.

 

Today’s markets

10th August 2016

  • CAD NHPI m/m
  • USD Unemployment Claims
  • USD Import Prices m/m
  • USD Mortgage Delinquencies
  • NZD Retail Sales q/q
  • NZD Core Retail Sales q/q
  • CNY Industrial Production y/y
  • CNY Fixed Asset Investment ytd/y

Overnight, the markets saw the central bank cut interest rates again, this time from the Reserve Bank of New Zealand. As expected, the RBNZ cut rates to record lows of 2% from 2.25%. In his press conference, RBNZ governor Graeme Wheeler, stated that the central bank had not seriously considered a bigger rate cut. Also, the kiwi gained ground against its counter-parties.  

Today’s event risks are very light on the ground with the only data release coming from the US as the weekly unemployment claims are posted.