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BONDS: NZGBS: Subdued Session Ahead Of Key Events, Q3 Jobs Tomorrow

BONDS
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NZGBs closed 1bp cheaper after a very subdued local session ahead of the RBA Policy Decision, (after-market) and the US Presidential Election later today. 

  • Earlier today the RBNZ released its Financial Stability Report. The report said the country is experiencing a pronounced economic downturn that could get worse.
  • Swap rates closed 1bp lower to 1bp higher, with a flattening bias.
  • RBNZ dated OIS pricing closed flat to 2bps firmer across meetings. A cumulative 97bps of easing is priced by February, with 56bps by year-end.
  • Q3 labour market data including wages are released tomorrow. They are expected to show a contraction in employment with the unemployment rate rising to 5% driven by lower growth and job shedding.
  • This softening in labour demand should help to ease wages growth, as well as no new public sector agreements, which drove the Q2 increase. The RBNZ meets on November 27 and is likely to cut rates again but the size of the move is currently uncertain.
  • On Thursday, the NZ Treasury plans to sell NZ$200mn of the 0.25% May-28 bond, NZ$250mn of the 4.50% May-35 bond and NZ$50mn of the 5.0% May-54 bond.
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NZGBs closed 1bp cheaper after a very subdued local session ahead of the RBA Policy Decision, (after-market) and the US Presidential Election later today. 

  • Earlier today the RBNZ released its Financial Stability Report. The report said the country is experiencing a pronounced economic downturn that could get worse.
  • Swap rates closed 1bp lower to 1bp higher, with a flattening bias.
  • RBNZ dated OIS pricing closed flat to 2bps firmer across meetings. A cumulative 97bps of easing is priced by February, with 56bps by year-end.
  • Q3 labour market data including wages are released tomorrow. They are expected to show a contraction in employment with the unemployment rate rising to 5% driven by lower growth and job shedding.
  • This softening in labour demand should help to ease wages growth, as well as no new public sector agreements, which drove the Q2 increase. The RBNZ meets on November 27 and is likely to cut rates again but the size of the move is currently uncertain.
  • On Thursday, the NZ Treasury plans to sell NZ$200mn of the 0.25% May-28 bond, NZ$250mn of the 4.50% May-35 bond and NZ$50mn of the 5.0% May-54 bond.