NEW ZEALAND: Mortgage Lending Rising Strongly
The RBNZ began its easing cycle in August of 2024 and has now cut the OCR 125bp to 4.25% with another 50bp likely on February 19. While we won’t know the impact of this on growth for some time given GDP data lag, the RBNZ’s data for December showed the recovery in residential mortgage lending is strong and broad-based. Dwelling prices have been weak but this increase in demand should be seen here soon.
NZ new mortgage lending %
- Total new residential mortgage lending rose 53% y/y in December and seasonally adjusted +18% m/m. The data is volatile but the 3-month average of the annual rate climbed to 32.2% from 23.3%. The level is its highest in just over three years.
- The strength wasn’t due to one particular group of home borrowers. Lending to first time homebuyers rose 10.4% y/y 3-month moving average, to other owner occupiers +32.8% and to investors it soared 62.3%.
NZ new mortgage lending by type %
Source: MNI - Market News/Refinitiv
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US TSYS: Cash Bonds Little Changed, 10YY At Higher Since May
TYH5 is 108-13, -0-01 from NY closing levels.
- Cash US tsys are dealing little changed across benchmarks on a newsflow-light Asia-Pac session.
- The US tsy 10Y yield is hovering around to 4.625% - the highest since late May'24.
- Markets will be closed on Wednesday for the New Year's Day holiday; otherwise, they will have full sessions for the balance of the week. Data includes MNI PMI and Pending Home Sales on Monday, FHFA housing data on Tuesday, weekly claims and construction spending on Thursday, and ISMs on Friday.
BONDS: NZGBS: Bear-Steepener As US Tsys Pressure On A Light Data Day
NZGBs closed showing a bear-steepener, with benchmark yields flat to 7bps higher.
- Cash US tsys are little changed in today’s Asia-Pac session after Friday’s heavy session. US data this week includes MNI PMI and Pending Home Sales on Monday, FHFA housing data on Tuesday, Weekly Claims and Construction Spending on Thursday, and ISMs on Friday.
- The NZ-US 10-year yield differential closed 2bps higher at -14bps after hitting -18bps early, its lowest level since late 2020. However, the NZ-AU 10-year did finish 3bps lower at flat.
- The local calendar was empty today and will remain so until the release of CoreLogic Home Values on January 2.
- Swap rates closed 5-6bps higher.
- RBNZ dated OIS pricing closed flat to 3bps firmer across meetings, with late 2025 leading. 54bps of easing is priced for February, with a cumulative 122bps by November 2025.
GOLD: Small Rebound After Friday’s Decline
Gold is 0.2% higher in today’s Asia-Pac session, after closing 0.5% lower at $2621.40 on Friday.
- Gold’s decline at the end of a subdued holiday-shortened trading week came after mixed US jobless data. The data did little to alter bets on the outlook for Federal Reserve interest-rate cuts. Lower rates are typically positive for gold, which doesn’t pay interest.
- Fed rate cuts into early 2025 gained slightly by Friday’s close vs. morning levels (*) as follows: Jan'25 steady at -2.7bp, Mar'25 -13.3bp (-13.1bp), May'25 -18.5bp (-17.7bp), Jun'25 -26.5bp (-25.7bp).
- According to MNI’s technicals team, the move down undermined the recent bullish theme. A resumption of weakness would signal scope for an extension towards the key support at $2536.9, the Nov 14 low.
- Moving average studies are in a bull mode position highlighting a medium-term uptrend and this suggests that the latest sell-off is likely a correction. Initial pivot resistance is $2640.0, the 20-day EMA. A breach of this EMA would be positive for bulls.
