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BONDS: NZGBS: Closed On A Strong Note, NZIER Pricing Intentions Soften

BONDS
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NZGBs closed on a strong note, with benchmark yields 1-2bps lower, after being as much as 3bps higher earlier. This came despite a strengthening in business confidence.

  • The NZIER Q3 Business Opinion Survey showed, after seasonal adjustment, a net 5% of businesses expect the economy to deteriorate versus a revised 40% in Q2. This was the strongest reading since Q2 2021.
  • With cash US tsys little changed in today’s Asia-Pac session, the local market’s change in direction during the session appeared linked to NZIER pricing intentions.
  • A net 3% of firms raised prices in Q3, which was the lowest reading since Q4 2020. Just 7% see price increases in Q4.
  • NZIER expects a 25bp cut in the OCR next week but a case can be made for a bigger move given the decline in pricing expectations. BNZ has shifted to a 50bp cut next week. 
  • Swap rates closed 1-2bps lower, with the 2s10s curve flatter.
  • RBNZ dated OIS pricing closed 1-3bps softer across meetings. A cumulative 91bps of easing is priced by year-end.
  • Tomorrow, the local calendar is empty.
  • Later today the US calendar flash PMI, JOLTS and ISMs data, and more Fed speak from Bostic, Barkin and Cook.
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NZGBs closed on a strong note, with benchmark yields 1-2bps lower, after being as much as 3bps higher earlier. This came despite a strengthening in business confidence.

  • The NZIER Q3 Business Opinion Survey showed, after seasonal adjustment, a net 5% of businesses expect the economy to deteriorate versus a revised 40% in Q2. This was the strongest reading since Q2 2021.
  • With cash US tsys little changed in today’s Asia-Pac session, the local market’s change in direction during the session appeared linked to NZIER pricing intentions.
  • A net 3% of firms raised prices in Q3, which was the lowest reading since Q4 2020. Just 7% see price increases in Q4.
  • NZIER expects a 25bp cut in the OCR next week but a case can be made for a bigger move given the decline in pricing expectations. BNZ has shifted to a 50bp cut next week. 
  • Swap rates closed 1-2bps lower, with the 2s10s curve flatter.
  • RBNZ dated OIS pricing closed 1-3bps softer across meetings. A cumulative 91bps of easing is priced by year-end.
  • Tomorrow, the local calendar is empty.
  • Later today the US calendar flash PMI, JOLTS and ISMs data, and more Fed speak from Bostic, Barkin and Cook.