Shane Solly: Harbour Asset Management expert on what the markets are projecting ahead of RBNZ announcement

The Reserve Bank is set to make an announcement this week, and experts are expecting at least one more cut to the OCR.

Markets are projecting the OCR will be cut down to 2.25, and they've priced it in accordingly.

Harbour Asset Management's Shane Solly explained further.

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Episode Transcript

Speaker 1 (00:09):
You're listening to a podcast from News Talks. There'd be
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Speaker 2 (00:16):
Shane Solly Harbor Asset Managements with us Allo.

Speaker 3 (00:18):
Shane, ay you that.

Speaker 2 (00:20):
So, what are the markets expecting from the Reserve Bank
in a couple of days.

Speaker 4 (00:24):
Yeah, so, look, the market's fully fact did in a
zero point two percent cut in rates.

Speaker 3 (00:29):
So that take us to two twenty five is official
cash rate.

Speaker 4 (00:32):
In fact, it's priced in a zero point two seven
to two twenty three of them.

Speaker 3 (00:36):
It says the market's getting a little bit of hia themselves.

Speaker 4 (00:38):
Maybe the main focus here there will be on how
much the Reserve Bank of New Zealand signals the possibility
of further cuts. Does it come out and sug just
another round of cuts given inflations stable but unemployment growth
is still modest, or does it actually indicate that using
cycle is over well close to over, I should say,
and let the cuts do the job of really picking

(00:58):
up the economy after quite a chunky series of cuts
of the last year or so. One thing here that
we need to keep watching for is this the New
Zealand doll.

Speaker 3 (01:06):
It's pretty weak.

Speaker 4 (01:07):
We near a five of your fifty six cents roughly
against the US dollar. That's doing a lot of the
work for the Reserve Bank. So yeah, when we look forward,
markets actually pricing and the official cash right had a
low of two point one percent in May twenty twenty six,
so market thinks there's going to be more rate cuts.

Speaker 3 (01:22):
That'll be the interesting part of the discussion.

Speaker 2 (01:25):
Now, we're about halfway through the current company reporting season
here in New Zealand. Is the tone getting a little
bit more upbeat? Do you think?

Speaker 3 (01:32):
Yeah? Yeah, we are halfway through.

Speaker 4 (01:33):
It's for the September period, and so far we've observed
more profit beats against consensus market expectations and messes. That's
pretty good. The last three years we've actually been seeing
more misses than beats, so it feels like there's a
little bit of a trend change something interesting.

Speaker 1 (01:48):
Now.

Speaker 4 (01:48):
Obviously, up to September, the economy is pretty challenging and
some companies has been calling that out. So there's been
the odd little disappointment in terms of timing versus markets
investors getting hid themselves. But you know, really the underlying
results are looking okay. We're seeing some companies really delivering
on their own self help, and those are the companies
that you know, when you look at it, they'll do

(02:10):
okay with the economy recovers in a hurry or not.
And that's where I think investors are starting to focus on.
Most companies are talking about since September, they've seen a
noticeable pickup in activity.

Speaker 3 (02:21):
So we are seeing improven activity. So maybe that trend continues.

Speaker 2 (02:24):
Yeah, brilliant stuff. Now listen to the US markets. We've
got a bit weird last week. Where did things get
to over the weekend?

Speaker 3 (02:29):
Yeah? Yeah, so yeah, good good points.

Speaker 4 (02:31):
So the US S and P five hundred, that's the
main index we all talk about, it was down about
one point nine percent last week, many due the technology
stocks falling, some risks around the US Federal Reserve not
cutting rates, in weak consumer confidence in comparison, zeon markets,
se markers and down zero point three So we did
our job of protecting. But the US markets on Friday

(02:52):
they bounced. There was a couple of the US Fed
Reserve speakers came out and suggested actually the central bank
headroom to ease cut rates, particularly given cool and labor markets,
and that actually saw the US market have a bit
of a flip and they needed stronger. I've seen a
bit of a pricing and of a December rate cut
back to seventy percent, So the expectation seventy percent of

(03:13):
the markets expecting the US feed to cut in December.
That's quite a big increase, and simile we're seeing a
bit of a bounce. US futures are showing that the
US market may be up zero point four percent tonight.
Our market here in his ZALM is up zero point
six so a little bit of a better time coming.

Speaker 3 (03:30):
At the end of the last week.

Speaker 2 (03:31):
Happy to hear that, Shane. Thanks very much, Shane, Sally
Harbor Asset Management.

Speaker 1 (03:35):
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