NEW ZEALAND: Higher Headline, Non-Tradeables Inflation Continues To Moderate
Apr-17 00:42
Q1 inflation printed higher than expected at 0.9% q/q bringing the annual rate to 2.5% up from 2.2% in Q4. There was a pickup in both the tradeables and domestically-driven non-tradeables components, which is likely to mean that the RBNZ will continue easing in 25bp increments and there may be pauses at some meetings depending on the data. Global developments and significant uncertainty around their impact cloud this outlook but NZ inflation remains within the band.
- Non-tradeables rose 1.1% q/q but Q1 is a seasonally high quarter thus the annual rate eased to 4.0% y/y from 4.5% y/y. This was the slowest since Q2 2021. Tertiary education made a large quarterly contribution.
- The largest contributor was rent rising 3.7% y/y, it has one of the largest weights in the basket. But they have moderated from a peak of 4.8% y/y in Q2 2024 and this was the first reading below 4% since Q1 2022. Lower immigration is easing pressure on the housing market. Local authority rates rose 12.2% y/y. Construction prices only increased 1.9% y/y.
- Tradeables have been driving disinflation but in Q1 rose 0.8% q/q, the highest quarterly rate since Q3 2023, which drove the annual rate back into positive territory at 0.3% from -1.1% in Q4. Petrol prices rose 4.6% q/q, the largest quarterly contributor, and higher excise added to tobacco.
- Statistics NZ noted that at less than a quarter “we are seeing the lowest proportion of the CPI basket increase in price by more than 5 percent over the last four years,” but it remains above the share pre-Covid, which should reassure the RBNZ but also make it cautious.
- CPI weights were updated.
- The RBNZ will release underlying inflation from its sectoral factor model at 1500 NZST/1300 AEST.
NZ CPI y/y%
Source: MNI - Market News/LSEG
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BOJ: MNI BoJ Preview - March 2025: Policy Steady
Mar-18 00:39
EXECUTIVE SUMMARY
- The Bank of Japan (BoJ) is expected to keep its policy rate at 0.50% in March, with no urgency for another hike after its January increase.
- Strong Shunto wage negotiations saw a 5.5% rise, but broader wage pass-through is needed for sustained inflation above 2%.
- Analysts expect a gradual rate hike to 0.75% by July or September and 1.0% by early 2026, depending on SME wage trends.
- Market pricing reflects uncertainty, with only half of a 25bps hike factored in for June and a full hike not priced until December.
- A July hike remains the base case, but a weak yen or inflation risks could accelerate the timeline, while political instability may delay it.
- Full preview here
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Mar-18 00:24
- Gold traded through and held above the $3,000 level for the first time, reaching $3,002.10 in Asian trading.
- Up over 15% year to date, golds ongoing rally has been fueled by expectations for interest rate cuts, inflation concerns and tariff risks.
- Stockpiles of US gold exchange warehouses recorded their biggest decline in three months, following a three-month frenzy ahead of the implementation of tariffs.
- Yet another major bank has increased their forecast for gold with UBS moving their target to $3,200.
- Indonesia’s President Prabowo inaugurated PT Freeport Indonesia’s gold smelter in East Java on Monday. The new smelter can produce up to 60 tonnes of gold annually.
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US TSYS: Cash Bonds Little Changed, Focus On Tomorrow's FOMC
Mar-18 00:21
In today's Asia-Pac session, TYM5 is 110-21, +0-01+ from closing levels.
- Cash US tsys are little changed after yesterday’s twist-flattening. Yields finished 3bps higher to 3bps lower, pivoting at the 7-year.
- US tsy yields rose to their daily highs after Retail Sales data was released, with the market focusing more on the stronger control group sales, but the move wasn’t sustained and yields subsequently tracked lower.
- Headline advance retail sales were much weaker than expected in February at 0.2% M/M (0.6% expected, -1.2% prior rev from -0.9%), but strong performances in core categories offset this. The control group sales rose 1.0% vs the 0.4% expected, more than offsetting the downward revision to Jan (-1.0% vs -0.8% prelim).
- Traders reported some spillover from a 6bps fall in Germany’s 10-year rate, driven by some short covering following the significant lift in yields, driven by much easier fiscal policy ahead.
- The focus remains on Wednesday's FOMC policy announcement.
