Daily Digest Market Movers: New Zealand Dollar strengthens ahead of RBNZ rate decision
- Swap markets imply a nearly 70% chance of the RBNZ lowering the cash rate by 25 basis points (bps) to 5.25%. Markets are pricing in 90 bps of easing this year and another 148 basis points in 2025.
- The US Producer Price Index (PPI) for final demand in the US rose 2.2% YoY in July from 2.7% in June, the Bureau of Labor Statistics showed Tuesday. This figure was below the market expectation of 2.3%. On a monthly basis, the PPI increased 0.1% MoM in the same period after rising by an unrevised 0.2% in June.
- The annual core PPI came in softer than expected, rising by 2.4% in July but falling short of an estimate of 2.7%. On a monthly basis, the core PPI remained unchanged.
- Investors expect a 25 basis point (bps) rate cut in September, followed by similar reductions in November and December. A 50 bps cut in September is possible but depends entirely on the data.
- Atlanta Fed President Raphael Bostic said on Tuesday that recent economic data made him "more confident" that the Fed can get inflation back to its 2% target. Still, more evidence is needed before he's ready to support lowering interest rates, per Reuters.
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