A reminder from New Zealand as Auckland plunges back into lockdown - outlook volatile

Via a note from ASB reflecting on the RBNZ and the renewed lockdown in NZ's largest city:

• Markets are now pricing in around 10bps of OCR hikes by the end of the year, and a 0.50% OCR by August 2022, which is consistent with our OCR view.
• However, the near-term interest rate outlook should remain extremely volatile, with the raising in Alert Levels in Auckland (Level 3) and the Rest of NZ (Level 2) in the weekend a reminder of the risks.
• We could see local yields ease and curves flatten, given they have risen a long way in a short period of time.

The trend should be better for NZ and the globe generally but ASB is right, there are still risks.

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re Auckland:

• 6New Zealand - 7-day lockdown for Auckland