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RBNZ raises its cash rate by 25bps, as expected

  
  Analysis

Official cash rate (OCR) from 0.5% to 0.75% now.

  • The Committee agreed it remains appropriate to continue reducing monetary stimulus so as to maintain price stability and support maximum sustainable employment 
  RBNZ projections for the path ahead:

 

  • sees official cash rate at 0.94% in March 2022 (previously 0.86%)
  • at 2.14% in December 2022 (pvs 1.62%)
  • at 2.3% in March 2023 (pvs 1.77%)
  • at 2.61% in December 2024

 

Sees annual CPI 3.3% by December 2022 (pvs 2.2%)

More from the Bank’s communications:

  • says headline CPI inflation is expected to measure above 5 percent in the near term before returning towards the 2 percent midpoint over the next two years.
  • says immediate relative price shocks risk generating more generalised price rises
  • capacity pressures have continued to tighten
  • broad range of economic indicators highlight that the New Zealand economy continues to perform above its current potential.
  • household spending and business investment will be dampened in the near-term by ongoing covid-19 health uncertainties
  • says recent nationwide health-related lockdown and restrictions in Auckland resulted in a sharp contraction in economic activity
  • says capacity pressures have continued to tighten

 

Governor Orr’s news conference is coming up at 0200 GMT.

After the knee-jerk dip in the kiwi$ on the widely-expected announcement of a 25bp hike NZD/USD is down a few points

(more…)

Goldman Sachs on Biden’s oil reserve release – worth less than $2 / bbl

  
  Analysis

Goldman Sachs says the US-led oil reserves release ‘a drop in the ocean’

 

  • says release of 70 mln-80 mln bbls smaller than what the market has been pricing in
  • release is worth less than $2/bbl, significantly less than $8/bbl sell-off that occurred since late October
  • Brent prices also priced in excessive concerns over EU oil demand from covid-19 wave
Goldman Sachs obviously underwhelmed with the announcement Tuesday US time. Everyone was, but underwhelming was expected.

 

Goldman Sachs says the US-led oil reservesrelease 'a drop in the ocean'

Singapore Q3 GDP +7.1% y/y (vs +6.5% expected)

  
Analysis, Economy

Singapore economic growth in the third quarter of 2021,  +1.3% q/q

The Ministry of Trade and Industry (MTI)
  • now sees 2021 GDP growth at around 7.0% (previous forecast 6.0% to 7.0%)
  • sees 2022 GDP growth of 3.0% to 5.0%
  • says the recovery of various sectors of the economy in 2022 is expected to remain uneven
  • says labour shortages likely to keep construction, marine & offshore engineering sectors output below pre-pandemic levels in 2022
A Singaporean MTI official says there is a risk that ongoing supply chain disruptions could push up global inflationary pressures.

India is looking to ban most private cryptocurrencies

  
  Analysis

Reports doing the rounds overnight on a bill to be presented in India’s parliament the session ahead.

  •  India is looking to bar most private cryptocurrencies when it introduces a new bill to regulate virtual currencies in the winter session of Parliament, the government said late on Tuesday.
  • The government will allow only certain cryptocurrencies to promote the underlying technology and its uses, according to a legislative agenda for the winter session that is set to start later this month.
Bitcoin doesn’t seem to have been dented too much by this:
Reports doing the rounds overnight on a bill to be presented in India's parliament the session ahead. 

The new head of Germany’s Bundesbank will be chosen this week

  
  Analysis

If you are missing the speculation about who will be the new Fed Chair now that Powell has got the nod, never fear!

Germany’s Bundesbank needs a new President.  Jens Weidmann steps down on December 31, his replacement is expected to be announced by the end of this week.
Reuters have a piece up on the contenders. Isabel Schnabel, member of the European Central Bank’s Executive Board, is in the running.
Isabel Schnabel

NASDAQ falls for the second consecutive day. Dow closes higher for the second consecutive day

  
Analysis, US Market

S&P and Dow industrial average move higher

The NASDAQ index fell for the second consecutive day. Yesterday the index fell -1.27%. Today’s declined took the price down -0.50%. That still is well off the lows which saw the index down as much as -1.6%.

The S&P and Dow industrial average both rose and are closing higher on the day. The S&P index was down as much as -0.56% at the lows. The Dow industrial average was down -0.21% at its trading lows before rebounding.
The provisional closes are showing:
  • Dow industrial average rose 194.55 points or 0.55% at 35813.79
  • S&P index rose 7.74 points or 0.17% at 4690.69
  • NASDAQ index fell -79.61 points or -0.50% at 15775.15
The Russell 2000 index fell for the fifth day in a row. It fell -3.5 points or -0.15% at 2327.85.
The S&P index was able to extend above its 100 hour moving average at the close at 4686.27.
For the NASDAQ index it trades between its 200 hour moving average at 15571.06, and its 100 hour moving average at 15890.75. The NASDAQ index high tested its 100 hour moving average and found sellers against that level. It would now take a move back above that moving average level to increase its bullish bias.. The NASDAQ index closes nearly 3% from its record high.

Major European indices end the session with mixed results

  
Analysis, Global Indices

UK’s FTSE and Spain’s Ibex move higher

The major European indices are ending the session today with mixed results. PMI flash estimates were stronger than expected. Yields moved higher. UK FTSE and Spain’s Ibex moved higher. Other indices are lower on the day.

  • German DAX, -1.0%
  • France’s CAC -0.7%
  • UK’s FTSE 100 +0.3%
  • Spain’s Ibex, +0.12%
  • Italy’s FTSE MIB -1.3%
Looking at the benchmark 10 year yields, yields are higher across the board but well off their high levels.
UK's FTSE and Spain's Ibex move higher_
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