Free Trial

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

BONDS

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.
215 words

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.

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.