RBNZ: RBNZ’s Conway To Speak On Forecasting On April 15

• RES 3: 97.190 - High May 5 2023
• RES 2: 96.730/932 - High Sep 17 / 76.4% of Mar-Nov ‘23 bear leg 
• RES 1: 96.310/360 High Feb 7 / High Dec 11  
• PRICE: 96.240 @ 15:49 GMT Feb 28
• SUP 1: 95.900 - Low Jan 14  
• SUP 2: 95.760 - Low 14 Nov ‘24
• SUP 3: 95.480 - Low Jan 11 2023 and a major support 

A medium-term bear cycle in Aussie 3-yr futures remains intact, with Wednesday weakness confirming short-term gains as corrective. On the upside, an extension higher would signal scope for 96.360, the Dec 11 high. Clearance of this level would open 96.730, the Sep 17 ‘24 high. On the downside, a reversal lower from current levels would signal a resumption of the downtrend. A deeper sell-off would refocus attention on 95.760, the 14 Nov ‘24 low. 

The focus of this week is likely to be Q4 GDP on Wednesday which is expected to rise 0.5% q/q and 1.2% y/y up from Q3’s 0.3% & 0.8%. Further inputs into the national accounts are released Monday and Tuesday. The RBA is expecting growth to improve over 2025 and is forecasting 1.1% y/y for Q4 2024.

• Q4 corporate profits print today and are forecast to rise 1.8% q/q after falling 4.6% q/q. Inventories are part of this release and are expected to be flat on the quarter.
• On Tuesday, the current account for Q4 is published and the deficit is projected to narrow to $12bn from $14.1bn. The net export contribution to GDP will also be out and is forecast to have detracted 0.1pp. The contribution from government spending is also released.
• Monday also sees the Melbourne Institute’s inflation gauge for February which eased to 2.3% y/y from 2.6% in January.
• February ANZ-Indeed job ads are also out today. They rose 0.2% m/m the previous month. The labour market has been surprisingly strong.
• The RBA publishes the minutes from the February meeting when it began easing on Tuesday. The tone of the statement and Governor Bullock’s press conference was very cautious regarding future easing. The minutes may clarify this and the reasons for easing. Deputy Governor Hauser speaks on Wednesday at 0845 AEDT at the AFR Business Summit.
• Tuesday also sees January retail sales which are forecast to rise 0.3% m/m. The series will be replaced in July with household spending. This series will be published on Friday and is expected to rise 0.5% m/m & 3.4% y/y.
• Final February S&P Global services/composite PMIs print on Wednesday. The preliminary readings were 51.4 and 51.2 respectively.
• January building approvals are published on Thursday and forecast to be flat after rising 0.7% m/m, which was driven by the volatile multi-unit component.
• Thursday also sees January trade data with the balance expected to widen to $5.8bn from $5.085bn. Merchandise exports began to recover in Q4 helped by stronger commodity prices.

ACGBs (YM flat & XM flat) are little changed. On Friday, US tsys rallied back to mid-December yield lows. Global trade, tariff uncertainty, and data that leaned towards softer inflation remained supportive.

• US Core PCE eased to 2.647% y/y from an upward revised 2.865% y/y (initial 2.794%) in Dec, as it starts to be helped by more favourable base effects.
• Cash ACGBs are unchanged with the AU-US 10-year yield differential at +9bps.
• S&P Global Manufacturing PMI for February printed at 50.4 from 50.2 in January.
• Australia’s home values rose 0.3% m/m in February, following two months of declines.
• Swap rates are little changed.
• The bills strip is flat to -1.
• RBA-dated OIS pricing is flat to slightly firmer across meetings today. A 25bp rate cut in April is given a 9% probability, with a cumulative 59bps of easing priced by year-end (based on an effective cash rate of 4.09%).
• Today, the local calendar will also see Melbourne Institute Inflation data alongside Q4 GDP partials, namely Company Operating Profit and Inventories.
• This week, the AOFM plans to sell A$800mn of the 4.25% 21 March 2036 bond on Wednesday and A$700mn of the 1.00% 21 December 2030 bond on Friday.