RBNZ: Sudden announcement about economic assessment on 21st July - TDS

Research Team at TDS, notes that the RBNZ “suddenly” announced that it would issue a brief update on its economic assessment on 21st July and this was new and unexpected information.

Key Quotes

“The Bank said this assessment would fill the longer than usual gap between the Bank’s last MPS on 9th June and the next MPS on 11th August. After recent hawkish tones about financial stability risks and the risks of cutting the cash rate only exacerbating these fears, we don’t see next week’s surprise assessment as necessarily being dovish.  However, as we said last week we reserve the right to reinstate our August cut expectations if the lofty exchange rate (i.e. lower for longer inflation profile) becomes the RBNZ’s top policy concern.

RBNZ non-resident bond holdings were released, cutting the share from 68.5% to 67.4% of NZGBs.  However, most of the cut in holdings was centered on the 17s-20s, while increasing duration into 21s, 23s, 27s and 33s.  Note 92.6% of May 21s are held offshore.

NZ Manufacturing PMI rose 0.5 pts to 57.7 to within a whisker of the highs for this year, the NZD failing to put the brakes on activity. Employment, New Orders, Finished Stocks and Delivery sub indices rose on the month, the only decline was in production. Data again points to a solid growth outlook.”