Market and economic wrap - Westpac

Analysts at Westpac's market wrap....

Key Quotes:

"Global market sentiment: Oil prices fell by another 2%, capping US bond yields. The US dollar was mixed: underperforming the majors but outperforming the minors.

Interest rates: US 10yr treasury yields eked a lower range of 2.14%-2.18%, while 2yr yields ranged between 1.35% and 1.36%. Fed fund futures continued to price the chance of a December rate hike around 40%.

Currencies: The US dollar index is down 0.2% on the day. EUR rose from 1.1130 to 1.1168. Outperformer GBP bounced off 1.2589 (a two-month low) to 1.2710 after BoE chief economist Haldane said he favoured tightening, a sharp contrast to the Governor’s comments a day earlier. USD/JPY ranged between 111.08 and 111.74. AUD fell from 0.7575 to 0.7543. NZD fell from 0.7250 to 0.7206. AUD/NZD fell from 1.0480 to 1.0437.

Economic Wrap

US existing home sales rose 1.1% in May (vs -0.4% expected). Inventories rose 2.1% to a still lean 1.96m. Sale remain in an erratic uptrend since 2010.

Event Risk

NZ: The RBNZ’s OCR Review today, resulting in a one-page press release (no press conference or forecasts), is widely expected to repeat May’s policy guidance that the OCR will remain at 1.75% for a long time. Risks are slightly skewed in a dovish direction. We also get migration data today, which should show inflows running at near-record levels.

US: The Jun Kansas City Fed index was last at 8 – pointing to moderate growth but underperforming relative to stronger national manufacturing indices. Fedspeak involves Powell speaking at a hearing of the Senate Banking Committee on “Fostering Economic Growth: Regulator Perspective”