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BONDS: NZGBS: Cheaper, Narrow Ranges, Q2 GDP Tomorrow

BONDS
BulletMarketsFixed Income Bullets

In today’s local session, NZGBs closed 4bps cheaper after dealing in narrow ranges. 

  • Outside of the previously outlined Consumer Sentiment and Current Account Balance, which had limited impacts, there wasn't much by way of domestic drivers to flag.
  • Q2 GDP prints tomorrow with both Bloomberg consensus and NZ Treasury expecting a 0.4% q/q decline resulting in the economy contracting 0.6% y/y. It rose 0.2% q/q and 0.3% y/y in Q1.
  • The RBNZ’s August forecast was slightly weaker at -0.5% q/q with Q3 also negative. Treasury noted this week that there were few signs of recovery in Q3. Thus, we expect the RBNZ to cut rates by 25bp at its October and November meetings.
  • All 15 analysts on Bloomberg expect the economy to contract with the range of forecasts between -0.1% and -0.4% q/q. The annual growth rate is projected to be between +0.2% and -0.7%.
  • Swap rates closed 3bps higher.
  • RBNZ dated OIS pricing closed 1-4bps firmer across meetings. A cumulative 82bps of easing is priced by year-end.
  • Tomorrow, the NZ Treasury plans to sell NZ$250mn of the 1.50% May-31 bond, NZ$200mn of the 4.25% May-34 bond and NZ$50mn of the 2.75% Apr-37 bond.
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In today’s local session, NZGBs closed 4bps cheaper after dealing in narrow ranges. 

  • Outside of the previously outlined Consumer Sentiment and Current Account Balance, which had limited impacts, there wasn't much by way of domestic drivers to flag.
  • Q2 GDP prints tomorrow with both Bloomberg consensus and NZ Treasury expecting a 0.4% q/q decline resulting in the economy contracting 0.6% y/y. It rose 0.2% q/q and 0.3% y/y in Q1.
  • The RBNZ’s August forecast was slightly weaker at -0.5% q/q with Q3 also negative. Treasury noted this week that there were few signs of recovery in Q3. Thus, we expect the RBNZ to cut rates by 25bp at its October and November meetings.
  • All 15 analysts on Bloomberg expect the economy to contract with the range of forecasts between -0.1% and -0.4% q/q. The annual growth rate is projected to be between +0.2% and -0.7%.
  • Swap rates closed 3bps higher.
  • RBNZ dated OIS pricing closed 1-4bps firmer across meetings. A cumulative 82bps of easing is priced by year-end.
  • Tomorrow, the NZ Treasury plans to sell NZ$250mn of the 1.50% May-31 bond, NZ$200mn of the 4.25% May-34 bond and NZ$50mn of the 2.75% Apr-37 bond.