OCR 30 April 2009

But will cutting the OCR get term rates down? Or by driving short term mortgage rates to new lows will we simply find more people rushing to take advantage of rates that can't possibly be sustained. Might a policy of no hikes in the foreseeable future be more credible if the OCR was not reduced further at all? Would be to me as I'd be less inclined to worry about another housing bubble.

Patch Wrote:
-------------------------------------------------------
> low cpi opens door for more cuts
>
> the rbnz needs to walk the walk to get rates down
> after talking earlier this month.

The low cpi may also been seen by the RBNZ as reason to not lower the rates further at this point in time as a cpi helps ease the pressure on peoples wallets, just as lower rates do. When the tax cuts are added to the mix RBNZ may believe holding the current rate to be the best thing for now.

Dibbo, where do you find information on what the financial markets are forecasting for the OCR? You mentioned 37 bps on Friday. Is this info available on the net?

Oh and for those of you buying up 50pt stocks, take a read of this [Don't bet your house on another 50 point ocr cut]



Edited 1 time(s). Last edit at 04/20/2009 11:00AM by Osty.

I believe he has a bloomberg terminal, the data is most likely delievered over a private connection or encrypted over the internet, rather than being accessible to the general public.

Osty, that was an interesting read. I suppose if we look at the history of the reserve bank announcements Bollard does tend to be a bit more conservative. I'm bailing out of longing the 50bps for now, expecting the 25bps to become more favourable amongst traders over the week.

I am using
[www.findata.co.nz]
and simple equations to calculate implied OCR,
it is now at 2.59%
Traders positions on interest rates futures changed dramatically last 2 days, as well as LIBOR-OIS spread, so I had to liquidate my huge short position (I was betting against 50 points cut). I lost half of my account
Still fundamentals are pointing to 25 point or even no cuts.

___

It is difficult to predict, especially others' predictions.



Edited 3 time(s). Last edit at 04/20/2009 01:49PM by dutching.

Osty Wrote:
-------------------------------------------------------
> Dibbo, where do you find information on what the
> financial markets are forecasting for the OCR? You
> mentioned 37 bps on Friday. Is this info available
> on the net?
>
> Oh and for those of you buying up 50pt stocks,
> take a read of this

[www.nbr.co.nz]

Need to check this if he is official reporter in NZ for Bilderberg Group or just Rupert Murdocks volunteer free-lancer.
Seems he doesn't bother to provide any evidential support for his biases (in other articles too), excerpt the claims that he knows what big boys told Dr Bollard to do and we all should obey.

___

It is difficult to predict, especially others' predictions.



Edited 1 time(s). Last edit at 04/20/2009 01:39PM by dutching.

Latest Reuters poll (below) puts median economist at 38% chance of -25, 53% chance of -50, and small chance of zero or other. OIS pricing ends the week at 35.5bps after Roy Morgan consumer confidence index rises to highest level this year, up on year earlier for first time since October 2007.

RBNZ official cash rate review: April 30 9 a.m. (2100 GMT)

APRIL MOVE RISK (pct) JUN 30 SEP 30 DEC 31
bps N/C -25 -50 -75*
ANZ-Natnl (-50) 0 40 55 5 2.25 2.25 2.25
ASB Bank (-50) 10 40 50 0 2.25 2.00 2.00
BNZ (-50) 5 40 55 0 2.25 2.00 2.00
Barclays (-25) N/A 2.50 2.50 2.50
Citi (-50) 5 40 50 5 2.25 2.25 2.25
Deutsche (-25) 2 55 40 3 2.50 2.50 2.50
4CAST (-25) 5 60 35 0 2.50 2.25 2.00
GS JBWere (-50) 5 15 40 40 2.50 2.50 2.50
Infometrics (-50) 20 25 55 0 2.25 2.00 2.00
ICAP (-50) 30 30 35 5 2.25 2.00 3.25
JP Morgan (-50) 5 15 65 15 2.25 2.25 2.25
RBC Capital (-50) 0 10 80 10 2.25 2.00 2.00
TD Securities(-50) 5 35 60 0 2.00 2.00 2.00
UBS (-50) 0 30 65 5 2.50 2.50 2.50
Westpac (-50) 1 45 50 4 2.25 2.00 2.00

MEDIAN: 5 38 53 5 2.25 2.25 2.25
AVERAGE: 7 34 53 7 2.32 2.20 2.27
RANGE: 0-30 10-60 35-80 0-40
PVS MEDIAN: 5 40 50 5 2.25 2.25 2.25

I think its a really though one to call, if you consider the RBs main aim to keep inflation between 1-3% then they can achieve this without any further cutting. However they presumably want a faster recovery so will have to cut rates somewhat.

Personally I think there are two outcomes:

1. The RB cuts 25% and tries talking again issuing a strong message that rates will be down for sometime.

2. The RB cuts 75% and shows its hand that it needs rates lower for a recovery.

either way I'm well short the OCR.APR30.NC, long the OCR.APR30.OTHER (with such a low price its a great hedge) and short a collection of OCR increase shares.

Latest surveys today by Bloomberg still overwhelmingly pointing to -50bps :- [www.bloomberg.com]

corbusian Wrote:
-------------------------------------------------------
> Latest surveys today by Bloomberg still
> overwhelmingly pointing to -50bps :-
> [www.bloomberg.com]
> d=a_y92rGhtn4k&refer=australia


But not the OIS market, 38 points priced in this morning.

I'm moving my pick to 25, with a stern statement outlining a seriers of 25 point cuts moving forward to a bottom of 2.25 in the second half of the year and no rises till mid 2010.

Lets face it short term rates are already low, what the RB needs to do is get the long end of the curve down, which can only be done with a steady cut pattern over time and the message of no rises

The OIS market closed today with just 34bps priced. The market seems inclined to think that you will be proven right Patch.

I`m Short selling the OCR 50 points cut. Way over priced.

Shhh.. they are iPredict donors too.

___

It is difficult to predict, especially others' predictions.

Business confidence up in April - biggest improvement since 2000. Looks like the markets are right and the economists are wrong (again).

[www.nzherald.co.nz]

Who thought the economists would be right? LOL



Edited 1 time(s). Last edit at 04/29/2009 05:41PM by Osty.

Osty Wrote:
-------------------------------------------------------
> Who thought the economists would be right? LOL

Reuters Economic Experts at 17:16 NZ time - 50 points cut expected by 12 / 15 = 80%:
[uk.reuters.com]

Reuters Economic Experts at 18:41 NZ time - 25 points cut expected by 60%:
[uk.reuters.com]

either in between Reuters Experts were watching NZ TV six o'clock news about Swine Flue, or logged at iPredict

(Bear raid on 50 points stock to 53% at 15:00-16:30 NZ time, then Reuters Experts are at least 2 hours late or maybe they believe that Swine Flu is beneficial for NZ economy.)

___

It is difficult to predict, especially others' predictions.



Edited 4 time(s). Last edit at 04/29/2009 10:20PM by dutching.

Osty Wrote:
-------------------------------------------------------
> Who thought the economists would be right? LOL


AHEM

LOL Woops.

All I can say is cha-ching

Not just because I was long on 50, but because I held off fixing my home loan.



Edited 1 time(s). Last edit at 04/30/2009 10:47AM by rocketman101.

Osty Wrote:
-------------------------------------------------------
> Who thought the economists would be right? LOL


Economists 1, Naysayers nil

and

Economist +$500, Naysayers -$???

Truth be told I bit the bullet after chatting with a couple of rates traders this morning. Seems all the 25 point buying was offshore and any one local was picking the 50.

So I went long 50s and stuck with my short increse 2010 trades.

all in all a good payday

And I got totally cleaned out

So I'll see ya'll again in a couple of weeks when I can afford to replenish my acct.

Me too, bkd.

I bought heaps of 25s because they were "such a good price". Do you think there might have been a reason for that? ;-)

the_master Wrote:
-------------------------------------------------------
> Me too, bkd.
>
> I bought heaps of 25s because they were "such a
> good price". Do you think there might have been a
> reason for that? ;-)

Yes, I had been driving the price down. There was no way he wasn't going to cut 50 after comming out and saying longer term interest rates and the exchange rate were to high.

The market had been pricing in somewhere between 25 and 50 so if he had gone 25 rates could have gone up further.

"There was no way he wasn't going to cut 50 after comming out and saying longer term interest rates and the exchange rate were to high."

That isn't true. If the exchange rate and long term rates had reacted to his talking he would have only done 25bp

But they didn't, thats my point. I only bought in in the latter stages.

Ok so the question is... what will he do next announcement??? :p



Edited 1 time(s). Last edit at 05/01/2009 01:33PM by talan.

@talan - my view is 25bp cut as is the market's. However, probably the most incorrectly priced stock at the moment is no change, and thus I've shorted a considerable amount already. I personally don't want to overcommit to 25bp at this stage given that there's probably more bad news than good news to come over the next 3-6 months.

Gota be 25 bpts economy is still up shit creek, its a bull rally in a bear market, dont be fooled (share market)