Tag Archives: Australia / New Zealand

UPDATE 3-Australia’s central bank is committed to keeping 3-year yields low amid bond losses | Instant News


* RBA holds cash value and 3-year yield target at 0.1%

* Said committed to yield target, to buy more bonds if needed (Add comments from CBA economists at pars 7,8, 11)

SYDNEY, March 2 (Reuters) – Australia’s central bank on Tuesday affirmed its pledge to keep interest rates at historic lows as policymakers struggle to stop a surge in bond yields that is hurting the country’s very strong economic recovery.

Closing its March board meeting, the Reserve Bank of Australia (RBA) keeps interest rates at 0.1% and is committed to maintaining “very supportive monetary conditions” until jobs and inflation goals are met.

The global bond market has been heavily sold off in recent days on speculation massive monetary stimulus will end soon as the economy emerges from recession triggered by the pandemic.

On Tuesday, Governor Philip Lowe said he does not expect to meet the RBA’s inflation and employment goals through 2024, signaling interest rates will remain at 0.1% for an extended period.

Despite that commitment, Australian bonds were sold on the 10-year futures which implied a yield of 1.72% compared to 1.66% on Monday.

The local dollar, which has been trading near a three-year high, pared some of its losses and was at $ 0.7762, up from a low of $ 0.7737 the previous day.

Economists at the Commonwealth Bank of Australia (CBA) expect the RBA to abandon its three-year yield curve control (YCC) target in the second half of this year while maintaining its flexibility to buy bonds at the end of a longer curve.

“We continue to believe that the ongoing improvement in domestic economic data will eventually force the RBA to do something about the YCC later this year,” said CBA economist Gareth Aird.

So far, Australia’s success in containing the coronavirus has allowed consumer spending to bounce back from a lockdown-fueled recession.

Figures released on Wednesday are expected to show gross domestic product (GDP) grew 2.5% in the December quarter, on top of the 3.3% jump in the previous quarter.

“More specifically, we think the RBA will exit YCC in the second half of 2021,” added Aird.

MORE THAN THAT?

Economists generally expect the RBA to extend its quantitative easing program targeting longer-term bonds of A $ 100 billion to help achieve its goals.

On Tuesday, Lowe reiterated the RBA’s commitment to a three-year yield target of 0.1% while adding that they will buy more bonds as needed to support that target.

The remarks follow last week’s global bond market defeat which saw Australian yields soar to two-year peaks in just a few sessions with three-year yields hitting 0.188%.

The bank responded with an aggressive A $ 3 billion ($ 2.33 billion) bond purchase offer last Friday, followed by another A $ 4 billion on Monday.

“The market is on notice,” said ANZ economists, underlining the RBA’s readiness to buy more bonds if needed.

“The bigger problem for the bond market is the continuation of the much better than expected data. It supports a continuous steep curve. “

Across the Tasman Sea, New Zealand’s central bank also stressed on Tuesday that it was in no rush to tighten policy, trying to quell market speculation about an early halt to stimulus.

$ 1 = 1.2875 Australian dollars Report by Wayne Cole; Edited by Sam Holmes

.



image source

2-NZ central bank UPDATES ignored market talk of an early cessation of stimulus | Instant News


(Added more details and background)

WELLINGTON, March 2 (Reuters) – New Zealand’s central bank is in no rush to tighten monetary policy, said assistant governor Christian Hawkesby on Tuesday, as he sought to quell market speculation about a quicker halt to stimulus and moving toward a rate hike. rates.

New Zealand’s stance reflects other central banks around the world, including the United States, Europe, Japan and Australia, which have pledged to keep the money taps open until sustainable growth returns to pre-coronavirus levels.

“The market wants to get ahead of the central bank but there will definitely be a wrong start and that is why we are seeing some volatility in the bond market at the moment,” Hawkesby told Reuters in an interview.

“Our approach is to keep reminding the market that we will be patient, and we are in no rush to remove stimulus,” he said.

Higher-than-expected domestic inflation, levels of confidence in jobs and business have sparked a market rally in New Zealand, following a global surge in bond yields – led by the US Treasury – on the back of speculation that a faster economic rebound will lead to a faster one. -of forecast tightening policies.

In New Zealand, the 10-year yield last week posted its biggest weekly gain since mid-2013 and the New Zealand dollar hit a 3-1 / 2 year high.

New Zealand’s successful response to the coronavirus crisis has helped it emerge from recession once in a generation faster than most other countries, despite a small outbreak in Auckland.

The Reserve Bank of New Zealand (RBNZ) left interest rates unchanged last week, and said the arrangement will be maintained for an extended period.

Hawkesby said New Zealand’s recovery was impressive, but added “there are pockets, regions and sectors that are still struggling.”

Australia’s neighboring central bank is widely expected to keep interest rates at a historic low of 0.1% at its meeting later Tuesday.

INFLATION DYNAMICS

Hawkesby said global banks wanted to maintain significant stimulus for an extended period, reinforcing comments from governor Adrian Orr last week that policy tightening too quickly could stifle growth.

“Part of this is driven by the fact that over the past 10 years inflation has been weaker than the central bank’s target,” Hawkesby said.

The government last week tasked with the RBNZ to help calm the flaming property market, another global phenomenon with prices skyrocketing in Australia, Canada and other markets in low interest rate environments.

The RBNZ reintroduced lending restrictions on Monday to curb speculative property investment. However, Hawkesby said while the LVR will reduce housing demand, it may not have a big impact.

“LVR will be a marginal influence on the housing market. We don’t want to overstate the potential impact. “($ 1 = 1.3767 New Zealand dollars) (Reported by Praveen Menon; Editing by Sam Holmes & Shri Navaratnam)

.



image source

Australian stocks rose as stronger hopes for a recovery enlivened the market | Instant News


* Afterpay surged 6.6% after Citi raised its target price

* The RBA is expected to keep interest rates on hold

* BHP, Rio hit a record high

March 2 (Reuters) – Australian stocks resumed their gains on Tuesday, with technology stocks leading gains, as the launch of another vaccine in the United States and optimism over the coronavirus aid package bolstered hopes of a faster global economic recovery.

Wall Street rallied overnight as bond markets calmed down after a month-long selloff, while Johnson & Johnson’s new coronavirus vaccine launch and hopes of a US fiscal stimulus passed in mid-March lifted investor sentiment.

Australia’s S & P / ASX 200 Index rose 1.05% to 6,860.70, the highest since February 19. The benchmark closed 1.7% higher on Monday after upbeat economic data reinforced recovery hopes.

The Reserve Bank of Australia on Monday also increased the size of its daily quantitative easing program which also helped sentiment.

The country’s central bank will hold its monthly policy meeting at a later date where the key interest rate is expected to remain unchanged at a historic low of 0.1%.

Tech stocks followed their US counterparts to gain nearly 3%.

Buy-now-pay-later giant Afterpay Ltd gained 6.6% after Brokerage Citi Research raised its share price target to A $ 124.8 from A $ 115.0, citing better prospects for the company’s 2021 full-year profit.

The mining sub-index rose by about 1.5%, with BHP Group and Rio Tinto each hitting record highs.

Australia’s “Big Four” banks rose between 0.4% and 1.8%, helping the financial heavyweights reach their highest levels in little more than a year.

Across the Tasman Sea, New Zealand’s benchmark S & P / NZX 50 index rose more than 1% to 12,467.73, the highest since Feb. 22.

Sanford Ltd and Genesis Energy were the top winners, up close to 4% each.

The Reserve Bank of New Zealand (RBNZ) on Tuesday said it was in no rush to remove economic stimulus and tighten monetary policy, after the central bank held interest rates last week.

Reporting by Nikhil Subba in Bengaluru; Edited by Stephen Coates

.



image source

Australia, NZ dlrs recover from bond market turmoil | Instant News


SYDNEY, March 1 (Reuters) – The Australian and New Zealand dollars recovered against the greenback on Monday after risk currencies fell late last week amid a sell-off on global bond markets.

The Aussie dollar was 0.69% higher at $ 0.7759, but still well below a three-year high of $ 0.8007 reached on Feb 25.

The Kiwi dollar was 0.66% higher at $ 0.7273 but down from the $ 0.7464 level it also reached on February 25, which was the highest since August 2017.

The currencies of Australia and New Zealand have risen in recent months due to a combination of soaring commodity prices, as well as the recovery of their domestic economies and housing markets from the COVID-19 crisis.

But optimism about the global economic recovery, supported by unprecedented fiscal and monetary stimulus, has fueled concerns about inflation and monetary tightening, sending rising global bond yields and weighing on riskier currencies.

“A number of Australian states have retreated from a recession sparked by last year’s lockdown and are growing at a pace above the trend … with vaccination launches now underway, the road to normalization looks more secure,” said Richard Yetsenga, chief economist at ANZ.

Australian debt, following a sell-off in global bond markets last week, is also rebounding from some of the biggest price losses in years seen on Friday.

The yield on the 10-year Australian 10-year bond fell 11 basis points to 1.64% after hitting 1.97% on Friday, the highest since May 2019 and up from below 1% in early January.

“Even though the prospect of nominal growth is rapidly improving, the central bank remains firmly committed to maintaining very accommodative policies,” added Yetsenga. “AUD and NZD have been the main beneficiaries of this trade, so far.”

New Zealand’s central bank governor on Friday reiterated that the bank will maintain its current easy policy setup for an extended period of time, saying it was wise to be patient.

Edited by Ana Nicolaci da Costa

.



image source

Australian job advertisements approach their 2-1 / 2 year peak in February | Instant News


FILE PHOTOS: Workers cast their shadows as they walk between office towers in Sydney’s Barangaroo business district in Australia’s largest city, 8 May 2017. REUTERS / Jason Reed

SYDNEY (Reuters) – Australia’s job advertisements rose to near a 2-1 / 2 year peak in February, for another sign massive fiscal and monetary stimulus is working to shore up the country’s economy following the recession caused by the coronavirus pandemic.

Monday’s figures from the Australian and New Zealand Banking Group showed total job advertisements grew 7.2% in February from January, when they rose a revised 2.6%.

At 174,010, advertisements are at their highest level since October 2018. They are also 13.4% higher than they were in December 2019, a strong increase given that April’s coronavirus lockdown has plunged the domestic economy into its first recession in three decades. April job advertisements totaled 64,828, down 61% from a year earlier.

“The continued strength in ANZ Job Advertisements gives us confidence that we will see a solid increase in net employment continuing during at least February and March,” said ANZ senior economist Catherine Birch. “The task of stopping the underutilization is still big enough.”

Official data showed 878,000 people were unemployed in January, 162,000 more than in March last year, while 1.37 million remained on government support.

Australia’s official unemployment rate stands at 6.4%, much higher than the 4% or less that the country’s central bank says is needed to boost wage growth and inflation.

Reporting by Swati Pandey; edited by Jane Wardell

.



image source