NEW ZEALAND: Households Remain Cautious
ANZ consumer confidence rose 0.6% m/m to 96.6 in February and is materially above April 2024’s 82.1 but consumers remain cautious, especially about the outlook. Also, sentiment in Q1 remains below Q4 and December’s recent peak of 100.2. The RBNZ rate cuts have helped to boost current conditions, which rose almost 3 points to 86.7, but they are also below December’s level. While confidence is off its recent lows, it is signalling subdued household expenditure for now as the labour market remains soft. The RBNZ is expected to cut rates 25bp in April and May.
- The RBNZ is forecasting the unemployment rate to begin falling in H2 2025 and that along with further monetary easing should help support consumer confidence and spending over the year.
- The “good time to buy a major household item” rose 1 point but remained negative at -15.
- Inflation expectations were fairly stable at 4.0% up from 3.9% in January. ANZ suggests that this indicator may have stabilised in line with petrol prices.
- Some of the details were very subdued with only 21% expecting to be better off in a year, down 2pp, perception on the economy in 12 months fell 1pp to -16% and current personal finances are down 5pp to -12%.
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STIR: RBA Dated OIS Slightly Firmer Ahead Of Q4 CPI
RBA-dated OIS pricing is slightly firmer across meetings ahead of today’s Q4 CPI data.
- However, current pricing remains 3-10bps softer compared to levels seen prior to the release of November’s Monthly CPI data in early January.
- Economists are divided on the timing of the first RBA rate cut, with opinions split between February and Q2. This makes today’s CPI data a critical focus.
- While the headline CPI is expected to rise by 0.3% q/q, bringing the annual rate down to 2.5% from 2.8%, the market’s attention will likely centre on the underlying trimmed mean and services inflation. These components will be scrutinised as government electricity rebates are expected to weigh on the headline figure.
- A 25bp rate cut is more than fully priced for April (121%), with the probability of a February cut at 76% (based on an effective cash rate of 4.34%).
Figure 1: RBA-Dated OIS – Today Vs. Yesterday
Source: MNI – Market News / Bloomberg
OIL: Data Show US Crude Stock Build As Canada Tariff Looms
Oil prices rose moderately on Tuesday driven by the persistent threat of an increase in protectionism. Oil is the most important Canadian export to the US and the US imports over half of its crude from Canada. President Trump has threatened 25% tariffs from Saturday, which would likely increase domestic fuel prices. They have been trending lower since mid-January but are still higher on the month.
- WTI rose 1.1% to $73.98/bbl after reaching $74.31 and then falling to $72.93. The 50-day EMA is at $72.16, clearance of this would signal scope for a deeper retracement. While the benchmark is down 0.9% so far this week, it is still up 3.8% on the month. It has started today slightly lower at $73.90. Initial and key resistance is at $79.48.
- Brent is 0.7% higher at $77.63/bbl after a high of $78.18 followed by a low of $76.85, remaining above the 50-day EMA at $76.01. It is down 1.1% this week but up 4% in January. Initial resistance is at $82.63, January 15 high.
- Bloomberg reported that US inventories rose 2.86mn barrels last week, according to people familiar with the API data. There has been a sharp increase of flows from Canada to beat the February 1 introduction of tariffs. Gasoline stocks rose 1.89mn while distillate fell 3.75mn. Official EIA data is released later today.
- Tightened sanctions on Russia and expectations of greater enforcement of those against Iran had boosted prices earlier in January. Crude fell yesterday following reports that Russia is attempting to avoid sanctions by shipping crude to India on restricted vessels anyway. The EU has proposed further measures on Russian banks and shadow fleet tankers.
JGB TECHS: (H5) Trend Needle Points South
- RES 3: 147.74 - High Jan 15 and bull trigger (cont)
- RES 2: 146.53 - High Aug 6
- RES 1: 142.73/144.48 - High Dec 9 / High Nov 11
- PRICE: 141.06 @ 16:12 GMT Jan 28
- SUP 1: 140.00 - Round number support
- SUP 2: 139.38 - 2.764 proj of the Aug 6 - Sep 3 - 9 price swing
- SUP 3: 138.87- 3.000 proj of the Aug 6 - Sep 3 - 9 price swing
A clear downtrend in JGB futures remains intact and the latest fresh cycle lows reinforce this condition. Note too that moving average studies on the continuation chart are in a bear-mode setup, highlighting a clear downtrend. The move down exposes the 140.00 psychological handle next. For bulls, a reversal would open 142.73 and 144.48, the Dec 9 and Nov 11 high respectively. For now, short-term gains are considered corrective.
