Lower interest rates may be further down the road

Global short-term interest rates rose as some G10 central banks raised their policy rates last week, notably Norges and the Bank of England, which raised them by 50bp.

Monday, June 26, 2023, 11:31 a.m.

By Sally Lindsay

Fed Chairman Jerome Powell’s hawkish comments, as well as hawkish comments by ECB officials eager to underscore the need to raise policy rates, pushed US rates higher.

ANZ believes the hurdles to raising the OCR in the coming months are high after the RBNZ intervened by adopting what Governor Adrian Orr called a “watch, worry and wait” phase.

“If global central banks push forward with rate hikes and stress that rate cuts are far away, there is a risk that local markets will pull back from pricing significant rate cuts over the next 12-18 months. 87bps by next October. rate cuts are priced in,” said Sharon Zollner, chief economist at ANZ.

“This poses upside risk to short-end swap rates. Domestic long-term interest rates are at the upper end of their trading range, but have yet to hit new highs. you can,” she says.

The New Zealand Debt Management Authority’s announcement of its July auction schedule this week is expected to be a landmark event, with an anticipated number of weekly issuance volumes and, therefore, New Zealand government bond syndicates for the next financial year. It will provide further clues.

Solner said bond supply remains a major concern for market participants, and the coming months will be a litmus test.

“We believe there will be 4, maybe 5 syndications in 2023/24, and importantly, a full calendar with PREFU, we expect syndications in July and August. doing” [pre-election economic and fiscal update]elections, coalition negotiations, HYEFU [half year economic and fiscal update] Presumably September-December issues will be excluded.

“Such front-loaded issuance profiles pose upside risk to long-term yields,” she says.

tag: degree of interest

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