RBNZ: MNI RBNZ Review-April 2025: “Scope” To Cut Further

ACGBs (YM +7.0 & XM +6.0) are stronger after today’s consumer and business confidence data.

• March Westpac consumer confidence jumped 4.0% m/m to 95.9, the highest in three years, boosted by the RBA’s 18 February 25bp rate cut, the start of an easing cycle.
• NAB business confidence continued its trend of oscillating around the zero mark. Business conditions were one point higher at +4 driven by profitability and trading. Prices were encouraging, signalling a further moderation in inflation in Q1 but costs picked up.
• Cash US tsys are 2-3bps richer after yesterday’s robust bull-steepener.
• Cash ACGBs are 6-7bps richer with the AU-US 10-year yield differential at +20bps.
• Swap rates are 7-8bps lower, with the 3s10s curve steeper.
• The bills strip has bull-flattened beyond the first contract, with pricing flat to +10.
• RBA-dated OIS pricing is 1-8bps softer across meetings today.
• Tomorrow, the local calendar will be empty. Melbourne Institute inflation expectations for March print on Thursday. The previous month they jumped 0.6pp to 4.6%, the highest since November 2023.
• Tomorrow, the AOFM plans to sell A$800mn of the 3.50% 21 December 2034 bond.

Oil prices fell sharply earlier in the APAC session as the risk-off tone from Monday driven by global growth concerns continued but they have bounced off the intraday low to be little changed today but are still retaining yesterday’s losses. WTI is down 0.2% to $65.91/bbl after falling to $65.29, just above initial support. Brent is slightly lower at $69.26/bbl following a low of $68.63, holding above support at $68.33. The USD index is 0.1% lower. 

• At the CERAWeek conference in Houston, the Vitol CEO said that oil prices in the $60-$80 range was “reasonable” for the next few years, according to Bloomberg. The Trump administration is eager to increase the US’ oil output, which producers support. Industry-based US inventory data is published later today.
• The US Energy Secretary Wright said at the conference that the government is ready to enforce sanctions against Iran. The supply outlook is particularly unclear with tighter sanctions against Iran and Venezuela possibly reducing global supply, while increased output from the US and potentially an easing of sanctions on Russia offsetting that but the effect of each development is unknown.
• The US’ EIA publishes its short-term energy outlook later today. The IEA publishes its March report on Thursday and OPEC on Wednesday.
• Later US January JOLTS job openings/layoffs print and given growth concerns are likely to be monitored closely. Bloomberg consensus is for steady 7600k vacancies and a slight pickup in layoffs to 1806k. The Eurogroup/Ecofin meetings take place today. 

A senior China advisor sees greater room for fiscal and monetary stimulus. 
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