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BONDS: NZGBS: Richer Ahead Of The RBNZ Policy Decision Tomorrow

BONDS
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NZGBs closed 5-6bps richer but slightly off the local session’s best levels. 

  • The local market opened stronger on the back of a sharp rally in US tsys. The rally had started in yesterday’s Asia-Pac session in response to President-elect Trump’s selection of Scott Bessent for Treasury Secretary. The rally then extended in the NY session.
  • Cash US tsys are flat to 1bp cheaper in today’s Asia-Pac session after news of President-elect Donald Trump’s threat to add another 10% to existing tariffs on China and impose 25% import tariffs on Canada and Mexico.
  • Swap rates are 3-5bps lower.
  • Tomorrow sees the RBNZ’s policy decision. All but one of the economists surveyed by Bloomberg are looking for a 50bp cut. One economist is looking for a 75bp cut. Our policy team noted early last week that an ex-RBNZ economist said that the central bank would consider a 75bps cut.
  • RBNZ dated OIS pricing is flat to 2bps softer across meetings. A cumulative 97bps of easing is priced by February, with 55bps priced for tomorrow’s meeting.
  • On Thursday, the NZ Treasury plans to sell NZ$250mn of the 3.0% Apr-29 bond, NZ$175mn of the 3.5% Apr-33 bond and NZ$75mn of the 1.75% May-41 bond.
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NZGBs closed 5-6bps richer but slightly off the local session’s best levels. 

  • The local market opened stronger on the back of a sharp rally in US tsys. The rally had started in yesterday’s Asia-Pac session in response to President-elect Trump’s selection of Scott Bessent for Treasury Secretary. The rally then extended in the NY session.
  • Cash US tsys are flat to 1bp cheaper in today’s Asia-Pac session after news of President-elect Donald Trump’s threat to add another 10% to existing tariffs on China and impose 25% import tariffs on Canada and Mexico.
  • Swap rates are 3-5bps lower.
  • Tomorrow sees the RBNZ’s policy decision. All but one of the economists surveyed by Bloomberg are looking for a 50bp cut. One economist is looking for a 75bp cut. Our policy team noted early last week that an ex-RBNZ economist said that the central bank would consider a 75bps cut.
  • RBNZ dated OIS pricing is flat to 2bps softer across meetings. A cumulative 97bps of easing is priced by February, with 55bps priced for tomorrow’s meeting.
  • On Thursday, the NZ Treasury plans to sell NZ$250mn of the 3.0% Apr-29 bond, NZ$175mn of the 3.5% Apr-33 bond and NZ$75mn of the 1.75% May-41 bond.