Outlook for interest rates

[Jenny Ruth]

Hi all. My latest column published on my Substack, Just the Business, looks at whether we should believe the Reserve Bank that interest rates may have to rise again next year and that the first rate cut won't be before mid-2025. The headline gives the game away: RBNZ wants us to believe the unbelievable.
You can read it here:
https://justthebusinessjennyruth.substack.com/p/rbnz-wants-us-to-believe-the-unbelievable

[SailorRob]

Some good points and data.

No mention of the most important input into everything though. Oil prices.

[GTM 3442]

I wonder what President Putin's trip to Saudi Arabia and the Emirates might mean for those oil prices.

[Jenny Ruth]

Hi SailorRob. I'd say oil prices is another thing RBNZ can't do anything about.

[SailorRob]

Hi SailorRob. I'd say oil prices is another thing RBNZ can't do anything about.

Well... They can solve climate change, inequality and appease the Forrest gods. Not much Orr cannot do!

[Valuegrowth]

Anything can happen to oil. Even can go below $50. I have studied volatility and major trends in the commodity market.

[mistymountain]

I wonder what President Putin's trip to Saudi Arabia and the Emirates might mean for those oil prices.

And to Gold Prices....will Russia continue to lever the BRICS towards Gold as a way to transact? https://www.forbes.com/sites/nathanlewis/2023/07/16/the-brics-go-for-gold/?sh=2db22ec65eb3

May take more years to achieve but given their Central Banks have significant gold hoards, history may well repeat...

[Valuegrowth]

One thing is for sure. Cannot expect major drop in interest rates in 2024 as well. Still it will be high.

https://nz.finance.yahoo.com/news/bank-focus-sustained-full-employment-232917707.html

[alokdhir]

Heard on CNBC why US10Y will go to 5.5% next year ...all the reasons are good for stocks but bad for bonds ....mix of better growth and higher inflation will lead to higher for longer rates ...Bonds will loose to stocks in this battle as per the commentator's opinion ....though no runaway rally either . Better watch out Bond holders .....Bull mate !!

[GTM 3442]

Gold is far too complicated. I’d look to a trend for trade to happen in currencies other than USD. Although what the Russian oil industry can do with all those Indian rupees is a moot point.

[stoploss]

One thing is for sure. Cannot expect major drop in interest rates in 2024 as well. Still it will be high.

https://nz.finance.yahoo.com/news/bank-focus-sustained-full-employment-232917707.html
OCR in NZ is way higher than the RBA cash rate V-G . We have done our tightening cycle . The market
wants to take rates lower here , just the RBNZ handbrake . Banks making massive profits and record margins on mortgages currently . IMO , we will see cuts to the OCR in 2024 .

[Daytr]

Most mortgages in Australia are floating so the impact of higher rates was felt far more quickly in Oz than here.
I agree re lower rates though, I wouldn't be surprised to see the RBNZ start talking about lowering rates in mid next year, so maybe cutting in the 3rd quarter.

By then Labour's wage increases should have mostly filtered through the data & virtually everyone will be on the higher rates and the drag on the economy will have increased.

[LaserEyeKiwi]

One thing is for sure. Cannot expect major drop in interest rates in 2024 as well. Still it will be high.

https://nz.finance.yahoo.com/news/bank-focus-sustained-full-employment-232917707.html

US 10-year already dropped from almost 5% back down to 4.1%. Nz banks get chunk of their funding from international market, so wouldn’t surprise me to see NZ mortgage interest rates to start drifting back down by a noticeable amount over the next few months.

[LaserEyeKiwi]

Hi all. My latest column published on my Substack, Just the Business, looks at whether we should believe the Reserve Bank that interest rates may have to rise again next year and that the first rate cut won't be before mid-2025. The headline gives the game away: RBNZ wants us to believe the unbelievable.
You can read it here:
https://justthebusinessjennyruth.substack.com/p/rbnz-wants-us-to-believe-the-unbelievable

good column, covers the situation nicely.

[Valuegrowth]

OCR in NZ is way higher than the RBA cash rate V-G . We have done our tightening cycle . The market
wants to take rates lower here , just the RBNZ handbrake . Banks making massive profits and record margins on mortgages currently . IMO , we will see cuts to the OCR in 2024 .

Thanks, Stoploss for the explanation.

According to my analysis, I expected interest rates pause during the 2nd half of 2023 followed by beginning of rates cut towards end of 2024. Once Fed begin to cut rates other Central banks will follow suit. I have split my mortgage into 2. One is expiring in September 2024. Hopefully, I may get better rates. First time I fixed one mortgage for 2 years and other one for 4 years during last 3 years. I always went for less than one year. From next year onwards I will fix my mortgage for a very short period. If banks give better rates for floating, I will go for it. Then I will have a flexibility to fix my mortgage according to the trend. I will monitor interest rates trend during first 6 months of next year to get better idea on the subject.

[Valuegrowth]

US 10-year already dropped from almost 5% back down to 4.1%. Nz banks get chunk of their funding from international market, so wouldn’t surprise me to see NZ mortgage interest rates to start drifting back down by a noticeable amount over the next few months.
Thanks LaserEyeKiwi for the Explanation. Other Central banks are waiting for inflation to cool down and next action of Fed. Time to time there will be shake ups in global markets. I heard this time highly risky instruments like interest swaps won't destabilise corporate world. My main concern is high level of global debt. As asset prices have inflated, we cannot buy them without debts. I am working hard to get out of mortgage trap to have some sort of comfortable retirement life.

[Valuegrowth]

https://www.thebalancemoney.com/debt-free-characteristics-4059833

[Valuegrowth]

https://nz.finance.yahoo.com/news/japans-10-jgb-yield-jumps-073648702.html

"The 10-year JGB yield climbed as high as 5 basis points (bps) to 0.8% earlier in the session, its highest since Nov. 16, following a 10.5 bps jump in the previous session, its biggest single-session increase since April 2013."

[Rawz]

It’s a sad day when even the bots get into the mortgage trap

[SailorRob]

It’s a sad day when even the bots get into the mortgage trap

One of the best posts in a long time 🤣