No moves to fix

In terms of flow there has been no move for mortgage holders to start fixing according to ANZ.  

Monday, April 12th 2010, 4:25PM

by Jenha White

Its weekly Market Focus says with some banks offering conditional specials in the variable market, it will be interesting to see if more competition is generated in this area.

"If so, it will just be another reason for mortgage holders to avoid paying fixed, which should limit selloffs in the swap market."

On another note, Westpac Weekly Commentary analyses a major development for the New Zealand economy this week that it feels isn't being highlighted enough.

 "The Quarterly Survey of Business Opinion highlighted that retailers appear to have struggled in the early months of the year, while the outlook for exporters has been much brighter.

It says as further confirmation, the ANZ commodity price index set a record new high in March with New Zealand receiving the best prices ever for commodity exports.

"Those who are banging the drum about recent softness in consumer spending, while ignoring the brighter outlook for exporters, are not - we would hope - the same people who were telling us last year that this very mix had to occur for the recovery to be sustainable."

ASB Business Weekly believes the Reserve Bank will commence the tightening cycle in June given the need to strike a balance between providing support to the fledgling recovery while at the same time keeping emerging inflation pressures in check.

"Even with Official Cash Rate (OCR) increases starting from June, stimulatory short-term rates are likely to prevail into early 2011, thus providing support to the economy during much of the tightening cycle."

JP Morgan Weekly Prospects and BNZ Markets Outlook are both looking ahead to Wednesday's retail trade survey and REINZ March housing data.

JP Morgan says New Zealand firms are still finding it difficult to raise prices given that demand remains weak.

"This supports our view that consumer spending will have remained soft in February, with retail sales numbers this week likely to show a modest rise of 0.3% for the month."

BNZ says household indicators are the main thread to the coming data week, with the BNZ Performance of Manufacturing Index and the March nationwide residential market statistics from REINZ.

"While they are unlikely to show any change, we hope they will at least portray stability, it's not until the latter half of the year that we expect the household sector to add full weight to the economic recovery."

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