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BONDS: NZGBS: Slightly Cheaper, Awaiting US ADP Data

BONDS
BulletMarketsFixed Income Bullets

NZGBs closed slightly cheaper but in the middle of today’s range, with benchmark yields flat to 1bp higher. With the local calendar domestic today, local participants sought directional from US tsys. However, that was not forthcoming, with US tsys little changed in today’s Asia-Pac session, ahead of today’s ADP employment data, GDP and Pending Home Sales data.

  • On a relative basis, the NZGB 10-year underperformed its US counterpart with the NZ-US yield differential 4bps wider at +20bps. Yesterday, the differential tightened to +16bps, just above July's low of +13bps, the narrowest level since mid-2021.
  • Swap rates closed 2bps lower, with implied swap spreads ~3bps narrower.
  • RBNZ dated OIS pricing closed 1-2bps softer for 2025 meetings. A cumulative 100bps of easing is priced by February, with 54bps by year-end.
  • The local calendar will see ANZ Business Confidence tomorrow.
  • Tomorrow, the NZ Treasury plans to sell NZ$175mn of the 3.0% Apr-29 bond, NZ$250mn of the 4.25% May-34 bond and NZ$75mn of the 1.75% May-41 bond.
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NZGBs closed slightly cheaper but in the middle of today’s range, with benchmark yields flat to 1bp higher. With the local calendar domestic today, local participants sought directional from US tsys. However, that was not forthcoming, with US tsys little changed in today’s Asia-Pac session, ahead of today’s ADP employment data, GDP and Pending Home Sales data.

  • On a relative basis, the NZGB 10-year underperformed its US counterpart with the NZ-US yield differential 4bps wider at +20bps. Yesterday, the differential tightened to +16bps, just above July's low of +13bps, the narrowest level since mid-2021.
  • Swap rates closed 2bps lower, with implied swap spreads ~3bps narrower.
  • RBNZ dated OIS pricing closed 1-2bps softer for 2025 meetings. A cumulative 100bps of easing is priced by February, with 54bps by year-end.
  • The local calendar will see ANZ Business Confidence tomorrow.
  • Tomorrow, the NZ Treasury plans to sell NZ$175mn of the 3.0% Apr-29 bond, NZ$250mn of the 4.25% May-34 bond and NZ$75mn of the 1.75% May-41 bond.