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BONDS: NZGBS: Cheaper With US Tsys Ahead Of FOMC Decision

BONDS
BulletMarketsFixed Income Bullets

In local morning trade, NZGBs have cheapened 4bps in line with the weaker close for US tsys. However, US yields finished off highs after falling briefly to one-week lows at the NY open. Generally, the session reflected position squaring ahead of today’s FOMC policy announcement. The markets still project closer to a 50bp cut than a 25bp move from the Fed.

  • Retail Sales headline beat with a slight upward revision to prior data (0.1% M/M (vs -0.2% expected, 1.1% prior rev up 0.1pp).
  • Meanwhile, Industrial production was much stronger than expected in August at 0.8% M/M (cons 0.2) but with some of the gloss taken off by a downward revision to -0.9% (initial -0.6%).
  • Swap rates are 3-4bps higher.
  • RBNZ dated OIS pricing is 1-3bps firmer across meetings. A cumulative 82bps of easing is priced by year-end.
  • Westpac consumer confidence rebounded in the three months through September, with the index rising to 90.8 from 82.2 in Q2.
  • NZ's Current Account Deficit was 6.7% of GDP in the 12 months through June, unchanged from Q1.
  • 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 local morning trade, NZGBs have cheapened 4bps in line with the weaker close for US tsys. However, US yields finished off highs after falling briefly to one-week lows at the NY open. Generally, the session reflected position squaring ahead of today’s FOMC policy announcement. The markets still project closer to a 50bp cut than a 25bp move from the Fed.

  • Retail Sales headline beat with a slight upward revision to prior data (0.1% M/M (vs -0.2% expected, 1.1% prior rev up 0.1pp).
  • Meanwhile, Industrial production was much stronger than expected in August at 0.8% M/M (cons 0.2) but with some of the gloss taken off by a downward revision to -0.9% (initial -0.6%).
  • Swap rates are 3-4bps higher.
  • RBNZ dated OIS pricing is 1-3bps firmer across meetings. A cumulative 82bps of easing is priced by year-end.
  • Westpac consumer confidence rebounded in the three months through September, with the index rising to 90.8 from 82.2 in Q2.
  • NZ's Current Account Deficit was 6.7% of GDP in the 12 months through June, unchanged from Q1.
  • 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.