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BONDS: NZGBS: Richer, RBNZ Suggests Slower Easing Pace After February

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NZGBs closed 1-6bps richer, ending the session at their best levels. Compared to pre-RBNZ decision levels yesterday, NZGBs are mixed. The 2-year yield is up 5bps while the 10-year is down 2.5bps.

  • The NZ-AU 10-year yield differential has widened slightly to +3bps, now 13bps above the early November low.
  • The RBNZ’s latest projections suggest a slower pace of easing ahead, with potential pauses in the rate-cutting cycle following a third consecutive 50bps cut in February, according to Assistant Governor Karen Silk.
  • “There could be pauses built in, but it is definitely a slower track after February,” Silk told Bloomberg News in an interview Thursday in Wellington. With inflation projected to pick up to 2.5% next year, monetary policy needs to remain mildly restrictive to “keep some pressure” on price-setting, she said. (per BBG)
  • Swap rates closed 3-7bps lower, with the 2s10s curve flatter.
  • RBNZ dated OIS pricing closed slightly softer across meetings today. Nevertheless, pricing remains 4-9bps firmer than yesterday’s pre-RBNZ decision levels. 42bps of easing is priced for February, with 97bps by November 2025.
  • Tomorrow, the local calendar will see ANZ Consumer Confidence data.
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NZGBs closed 1-6bps richer, ending the session at their best levels. Compared to pre-RBNZ decision levels yesterday, NZGBs are mixed. The 2-year yield is up 5bps while the 10-year is down 2.5bps.

  • The NZ-AU 10-year yield differential has widened slightly to +3bps, now 13bps above the early November low.
  • The RBNZ’s latest projections suggest a slower pace of easing ahead, with potential pauses in the rate-cutting cycle following a third consecutive 50bps cut in February, according to Assistant Governor Karen Silk.
  • “There could be pauses built in, but it is definitely a slower track after February,” Silk told Bloomberg News in an interview Thursday in Wellington. With inflation projected to pick up to 2.5% next year, monetary policy needs to remain mildly restrictive to “keep some pressure” on price-setting, she said. (per BBG)
  • Swap rates closed 3-7bps lower, with the 2s10s curve flatter.
  • RBNZ dated OIS pricing closed slightly softer across meetings today. Nevertheless, pricing remains 4-9bps firmer than yesterday’s pre-RBNZ decision levels. 42bps of easing is priced for February, with 97bps by November 2025.
  • Tomorrow, the local calendar will see ANZ Consumer Confidence data.