BONDS: NZGBS: Closed Slightly Cheaper After A Subdued Session

NZGBs closed on a weak note with yields 3bps higher. Dealings were subdued on a data light session ahead of tomorrow’s FOMC policy decision. 

• Cash US tsys are slightly cheaper in today’s Asia-Pac session after yields fell 2-5bps yesterday. Today's US calendar sees Retail Sales, Industrial Production and a 20y bond auction.
• NZGBs held by international investors increased to 60% from a month earlier in August, according to the RBNZ.
• In its Fortnightly Economic Update, the NZ Treasury said “With migration levels normalising, weakness is emerging across more services industries. House sales continue to drop and, while interest rates are falling, average mortgage rates are still elevated limiting retail spending and house price growth.” (per BBG)
• Swap rates closed 2bps higher.
• RBNZ-dated OIS pricing closed flat to 3bps firmer across meetings. However, year-end expectations, currently at 4.40%, remain just 6bps above the cyclical low of 4.34% set in late December last year.
• Tomorrow, the local calendar will see Current Account Balance and Westpac Consumer Confidence data, ahead of Q2 GDP on Thursday.
• On Thursday, 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.