AM Notes: All positive down under

Kicking things off with the overnight moves and news...

Generally positive sentiment in Asia...

Nikkei underperfomance is being attributed to a surprise drop in Japan machinery orders stoking recovery fears (and a stronger yen won't help the exporters)...

USD is down again, AUD, NZD & GBP all up, Oil higher & U.S. equities flat...

RBNZ re-run: Holding...

The Committee agreed to maintain its current stimulatory monetary settings until it is confident that consumer price inflation will be sustained at the 2 percent per annum target midpoint, and that employment is at or above its maximum sustainable level. Meeting these requirements will necessitate considerable time and patience.

The Committee agreed that it was prepared to lower the OCR if required.

As you were then...

Westpac don't expect the RBNZ to go negative, nor do they expect them to raise rates until 2025 😲

...the case for going negative has diminished since last year as the economic outlook has improved. We suspect that taking the OCR negative would require evidence of a sudden shift down in domestic activity. If the outlook is more towards a slow pace of recovery, then keeping the existing stimulus measures in place for longer may be more appropriate.

NZD rallied ahead of the meeting and continued higher afterwards, breaking out of the recent range & now up ~90 ticks from yesterdays lows...

Australian Consumer sentiment soars to 11 year high: Westpac-Melbourne Institute Index of Consumer Sentiment increased by 6.2% to 118.8 in April from 111.8 in March...

All very positive - a couple of points to highlight 👇

  • The exception is the ‘time to buy a major household item’ sub-index which dipped 0.2% in the month and is only on a par with its 2018 levels. This component is around 15% below the highs of that 2009-10 period.Perhaps the relative underperformance of this component reflects expenditure switching with purchases of household goods relatively strong during the pandemic but possibly waning now that reopening is allowing consumers to spend more freely.

  • Last year saw spending on durables rise 11.5% but spending on discretionary services slumped 27%.

  • The ‘time to buy a dwelling’ index fell by 7.9% from 116.4 to 107.2. It is now 18.8% below its recent peak in November. Buyers appear to be discouraged by the recent surge in prices and implications for affordability.

  • Consumers are confident about the jobs outlook but a little less buoyant than a few months ago and certainly less upbeat than back in 2009–10 when the wider confidence measures were comparable with current levels.That comparison with confidence overall is consistent with the notion that the unemployment rate is still well above ‘full employment’ levels – arguably close to 2 percentage points above.

Earnings reports picking up pace from today, starting JPM, GS & WF

  • Worth noting that bank stocks may be as sensitive to moves in yields as they are to the earnings reports - long end yields heading higher is positive for banks in this environment...  

Some previews from my Twitter travels 👇

The big event is at 10AM 👇

 Here's the link to the upcoming interview with @davidbelle_ on Wednesday the 14th of April at 10:00 BST.

Ep 18: David Belle | CEO/Founder of Macrodesiac & Director for growth @ ... https://t.co/XJSUuYHMO9 via @YouTube #podcast #markets #blackheartredspade #trading— BlackHeartRedSpade (@bheartrspade) April 12, 2021 

Today's calendar is uninspiring, although we have plenty of central bank speakers to keep us entertained...

Powell will get all of the attention after yesterday's CPI print, but Clarida is arguably the main event...

Clarida - the New Policy Framework and Outcome Based Forward Guidance at the Shadow Open Market Committee Meeting

Various ECB speakers including Lagarde, De Guindos, Panetta (digital euro), Schnabel

Fed's Powell, Williams, Clarida, Bostic, & Kaplan

BOE's Haskel will also be speaking on 'intangible capital'

Yellen's up at 7:15pm BST at a National Action conference too