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BONDS: NZGBS: Closed On A strong Note As Market Looks To RBNZ Decision

BONDS
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NZGBs closed on a strong note, with benchmark yields 4-7bps lower, led by the belly of the curve. 

  • With the domestic calendar light again today, the strong move appears to reflect anticipation that the RBNZ may cut by more than 50bps next Wednesday or possibly signal a more aggressive easing profile looking ahead.
  • All economists surveyed by Bloomberg are looking for a 50bp cut. That said, our policy team noted earlier this week that an ex-RBNZ economist said the central bank would consider a 75bps cut.
  • The AUD/NZD cross continues to push higher, last near 1.1140. We are within striking distance of earlier YTD highs (1.1152). The NZDUSD fell to a one-year low.
  • The next key release in NZ will be Q3 Retail Sales ex-Inflation on Monday.
  • Swap rates closed 4-5bps lower, with implied swap spreads tighter.
  • RBNZ-dated OIS pricing closed 3-9bps softer across 2025 meetings. A cumulative 95bps of easing is priced by February, with 54bps for next Wednesday.
  • By July, New Zealand’s official cash rate is projected to be 64bps lower than Australia’s, despite currently sitting at +43bps. For context, back in late October, the NZ-AU official rate differential was expected to reach -75bps.
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NZGBs closed on a strong note, with benchmark yields 4-7bps lower, led by the belly of the curve. 

  • With the domestic calendar light again today, the strong move appears to reflect anticipation that the RBNZ may cut by more than 50bps next Wednesday or possibly signal a more aggressive easing profile looking ahead.
  • All economists surveyed by Bloomberg are looking for a 50bp cut. That said, our policy team noted earlier this week that an ex-RBNZ economist said the central bank would consider a 75bps cut.
  • The AUD/NZD cross continues to push higher, last near 1.1140. We are within striking distance of earlier YTD highs (1.1152). The NZDUSD fell to a one-year low.
  • The next key release in NZ will be Q3 Retail Sales ex-Inflation on Monday.
  • Swap rates closed 4-5bps lower, with implied swap spreads tighter.
  • RBNZ-dated OIS pricing closed 3-9bps softer across 2025 meetings. A cumulative 95bps of easing is priced by February, with 54bps for next Wednesday.
  • By July, New Zealand’s official cash rate is projected to be 64bps lower than Australia’s, despite currently sitting at +43bps. For context, back in late October, the NZ-AU official rate differential was expected to reach -75bps.