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BONDS: NZGBS Curve Little Changed, Mfg PMI Rises

BONDS
BulletMarketsFixed Income Bullets

NZGBs are little changed in early morning trading, curves have steepened over the week, with the long-end trading 1-2bps cheaper. Earlier this morning we saw August House prices fall, while BusinessNZ Mfg PMI rose slightly.

  • Overnight, PPI final demand was slightly-above-expectations at 0.2% vs 0.1%, although this was offset by down-revisions to prior, weekly claims slightly higher than expected: 230k (cons 227k) in the week to Sep 7 after a marginally upward revised 228k (initial 227k).
  • NZ houses are taking longer to sell, with the median time reaching 50 days in August, the highest since April 2023 with house prices flat in August after five months of declines, annual prices dropped 0.7%, the first yearly fall since November.
  • NZ Mfg PMI rose to 45.8 in August from 44.4 in July, marking the 18th consecutive month of contraction, though improving from a low of 41.4 in June. All five sub-indexes remained below 50 for the third straight month, with production at 46.3 and new orders at 46.8. Despite slight improvements in business confidence, current conditions remain challenging.
  • Swap rates are unchanged this morning
  • RBNZ dated OIS has cooled 2bps for the October meeting, with 34.5bps of cuts now priced and 81bps of cuts priced into year-end. Looking further out the curve, we trade slightly cooler for the Feb & April meetings, but firmer in May and July.
  • Focus will now turn to GDP data on Thursday.
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NZGBs are little changed in early morning trading, curves have steepened over the week, with the long-end trading 1-2bps cheaper. Earlier this morning we saw August House prices fall, while BusinessNZ Mfg PMI rose slightly.

  • Overnight, PPI final demand was slightly-above-expectations at 0.2% vs 0.1%, although this was offset by down-revisions to prior, weekly claims slightly higher than expected: 230k (cons 227k) in the week to Sep 7 after a marginally upward revised 228k (initial 227k).
  • NZ houses are taking longer to sell, with the median time reaching 50 days in August, the highest since April 2023 with house prices flat in August after five months of declines, annual prices dropped 0.7%, the first yearly fall since November.
  • NZ Mfg PMI rose to 45.8 in August from 44.4 in July, marking the 18th consecutive month of contraction, though improving from a low of 41.4 in June. All five sub-indexes remained below 50 for the third straight month, with production at 46.3 and new orders at 46.8. Despite slight improvements in business confidence, current conditions remain challenging.
  • Swap rates are unchanged this morning
  • RBNZ dated OIS has cooled 2bps for the October meeting, with 34.5bps of cuts now priced and 81bps of cuts priced into year-end. Looking further out the curve, we trade slightly cooler for the Feb & April meetings, but firmer in May and July.
  • Focus will now turn to GDP data on Thursday.