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BONDS: NZGBs Richer, Curve Steepens, Economists See No GDP Growth

BONDS
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NZGBs are richer today, closing at session's best. Liquidity was very thin today, while headlines were light.

  • Economists from the New Zealand Institute of Economic Research have revised their forecasts, now projecting 0.0% annual GDP growth for 2024-25, down from 0.6% in the June survey. For 2025-26, GDP growth is expected to be 2.2%, slightly lower than the previous forecast of 2.4%.
  • New Zealand’s Performance of Services Index rose slightly to 45.5 in August from 45.2 in July although this marked the sixth consecutive month of contraction, the longest such period since the global financial crisis. Although still below the 50 threshold indicating growth, the gauge has recovered from a three-year low of 41 in June. All five sub-indexes remain in contraction, with the activity measure rising to 43.9. The composite index, which includes the PMI, increased to 45.6 from 45.0 in July
  • The NZGB curve has bull-steepened today, yields closed 1.5-5.5bps lower. The 2yr is -5.2bps at 3.800%, while the 10yr is -3.0bps at 4.051% both at new cycle lows
  • Swap rates are flat-5.5bps lower curve is steeper.
  • RBNZ dated OIS has firmed slightly today, with 40bps priced in for October, and 88bps of cuts priced in by year-end, pricing has also firmed 2-5bps into May 2025.
  • Focus for New Zealand this week will be on GDP due out Thursday.
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NZGBs are richer today, closing at session's best. Liquidity was very thin today, while headlines were light.

  • Economists from the New Zealand Institute of Economic Research have revised their forecasts, now projecting 0.0% annual GDP growth for 2024-25, down from 0.6% in the June survey. For 2025-26, GDP growth is expected to be 2.2%, slightly lower than the previous forecast of 2.4%.
  • New Zealand’s Performance of Services Index rose slightly to 45.5 in August from 45.2 in July although this marked the sixth consecutive month of contraction, the longest such period since the global financial crisis. Although still below the 50 threshold indicating growth, the gauge has recovered from a three-year low of 41 in June. All five sub-indexes remain in contraction, with the activity measure rising to 43.9. The composite index, which includes the PMI, increased to 45.6 from 45.0 in July
  • The NZGB curve has bull-steepened today, yields closed 1.5-5.5bps lower. The 2yr is -5.2bps at 3.800%, while the 10yr is -3.0bps at 4.051% both at new cycle lows
  • Swap rates are flat-5.5bps lower curve is steeper.
  • RBNZ dated OIS has firmed slightly today, with 40bps priced in for October, and 88bps of cuts priced in by year-end, pricing has also firmed 2-5bps into May 2025.
  • Focus for New Zealand this week will be on GDP due out Thursday.