NEW ZEALAND: Migration Gains Off Peak But Still Elevated
NZ saw a net migration gain of 7380 in April after an upwardly revised 4910. This was the largest increase this year and the 12-month sum remains elevated but it peaked in October and continued trending lower in April.
- Strong migration has added to the labour supply and helped to reduce tightness in the labour market. SEEK applications per ad are at very high levels and while they may turn down soon, they are likely to remain elevated. Weaker job prospects are probably weighing on NZ’s attractiveness as a destination and it seems to be driving an increase in departures.
- While stronger supply of labour reduces inflationary pressures, the rise in the working age population is putting pressure on housing, especially rents. So, the RBNZ is likely on hold for the foreseeable future.
- Westpac notes that both inflows and outflows of people were strong in April, which may be due to the April school holidays. There was a large rise in “migrants” on visitor visas.
- ASB points out that growth in tourist numbers is slowing and that will weigh on NZ growth.
NZ net migration vs job applications
Source: MNI - Market News/SEEK/Refinitiv
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BOJ: Rinban Purchases
The BoJ buys a total of ¥0.95trln of JGBs from the market.
- ¥375bn worth of JGBs with 1-3 Years until maturity
- ¥425bn worth of JGBs with 5-10-5 years until maturity
- ¥150bn worth of JGBs with 10-25 Years until maturity
NEW ZEALAND: VIEW: Westpac Thinks April Data Signal Upside Risks To Q2 CPI
April data covering 45% of the CPI were released today with food prices +0.6% m/m driven by groceries, meat and takeaway. Rents rose 0.5% m/m to be +4.6% y/y but there are signs of “some easing in new rental agreements”. Petrol prices rose 1.8% m/m and there were “some big seasonal swings in the volatile travel categories”. Westpac sees today’s data indicating that there’s an upside risk to the RBNZ’s 0.6% q/q forecast for Q2 CPI, “on balance”.
- “Looking through the month-to-month volatility, while lower import prices have pulled down inflation, today’s data highlights the continued firmness in domestic prices such as rents. As a result, we continue to expect a gradual easing in overall inflation. Inflation is only likely to drop below 3% late this year, and a return to the 2% target is still a way off.”
- “On its own, today’s update probably won’t have been a big surprise for the RBNZ. However, it follows the March quarter result that was stronger than they had expected. Overall, the RBNZ is looking at a firmer inflation outlook than they had assumed when they last published forecasts in February.”
JGBS: Futures Firm With US Tsys, BoJ Buying Ops Soon
JGB futures are a touch higher in early Monday dealings. We were last 144.25, -01 (just below session highs). We finished up last week at 144.18.
- US Tsy futures have ticked slightly higher since the open, but remain comfortably off late highs from last week. This has probably lent some support to JGBs.
- On the data front, we had April money stock figures, with M2 y/y up 2.2% versus 2.5% in March (not a sentiment shifter). Tomorrow, we have the April PPI print.
- In the cash JGB space, we are little changed in yield terms, the 10yr last around 0.91%.
- Back end swap rates continue to trend higher, the 20-30yr tenors up +2bps at this stage.
- Coming up soon we have BoJ bond buying ops.
