RBNZ: Next hike almost fully priced for Feb 2018 - Westpac

Imre Speizer, Research Analyst at Westpac, explains that market pricing for the RBNZ remains, with the next hike almost fully priced for Feb 2018.

Key Quotes

“The weak GDT dairy result last week only briefly dampened pricing, US rate rises dragging pricing the other way. The RBNZ MPS on 23 March will almost surely retain its long on-hold message. Key inputs to its thinking will be the lower NZD TWI and lower dairy prices.”

“Curve slope

US yields continue to rise, and NZ long-end yields slavishly follow, resulting in a steeper NZ curve. The NZ 2-10yr swap last week broke above the recent 100bp-120bp range, and is now at a three-year high. We target 140bp multi-week. The NZ yield curve remains wedded to US treasury yields, and that should be the case for some time given the OCR is likely to be unmoved for some time.”