ECB impacting NZ yields lower - ANZ

Analysts at ANZ explained that the ECB published their holdings of corporate securities for the first time.

Key Quotes:

"Since 8 June central banks across Europe have purchased $11.5bn of assets comprising around 400 securities. The top three sectors were consumer, utilities, and financials. In terms of countries, the top three holdings are from Germany, France, and Italy."

"The trickle-down impact is one of the factors that we see driving NZ yields lower. As European investors are taken out of their bonds, they need to find somewhere else to invest, and NZ looks pretty good, with high interest rates, a sound credit rating, and to date, a pretty decent performance by the currency."

"The latter is clearly something that upcoming RBNZ communications and policy decisions will attempt to address (directly and indirectly respectively), but even so, our sense is that we are not going to see the NZD move materially lower (or get anywhere near where exporters want it to be) without much deeper OCR cuts (to well below 2%). The domestic economy doesn’t “need” cuts, but something needs to be done to address tightening financial conditions, and options are limited."