How the market reacts to Wednesday’s HLFS is more difficult than normal to get a feel for. We are most conscious, however, of last Friday’s US non-farm payrolls, which suggested that even if employment comes in above expectations (something still quite possible for the Q1 NZ HLFS) this might be downplayed if other elements look not so strong. In the case of the US payrolls it was the reversal in participation. In the case of the NZ HLFS it could be an unemployment rate that fails to fall much, if at all, thus appearing quite a bit looser than central bank expectations. And, let’s face it, the markets have, rightly or wrongly, been inclined to water down New Zealand’s projected OCR tightening over the last number of weeks. It’s what’s keeping local fixed-term mortgage rates from increasing in the manner the Reserve Bank probably prefers.
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