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BONDS: NZGBS: Unchanged Ahead Of RBNZ Policy Decision

BONDS
BulletMarketsFixed Income Bullets

In local morning trade, NZGBs are unchanged after US tsys finished with a modest twist-steepening.

  • The markets shook off the announcement aftermarket yesterday that President-elect Trump planned to impose 25% tariffs on Mexico and Canada, and an additional 10% on Chinese imports. There was also little impact on the announcement of a cease-fire between Israel and Hezbollah.
  • The FOMC minutes were also taken in stride.
  • The RBNZ is widely expected to cut rates by 50bp at today's policy meeting, which also releases updated staff forecasts. The discussion could be centred around 25bp, 50bp or even 75bp of easing though.
  • Inflation is in the RBNZ's target band, and weak growth and excess capacity persist, so there is no reason to slow down to 25bp. Monthly data is signalling that while the economy is still soft, it may be stabilising, so there is no need to panic and cut by 75bp.  
  • The market anticipates a 55bp cut at today's policy meeting, with a cumulative 96bps of easing by February and 144bps by July.
  • Swap rates are unchanged.
  • Tomorrow, the NZ Treasury plans to sell NZ$250mn of the 3.0% Apr-29 bond, NZ$175mn of the 3.5% Apr-33 bond and NZ$75mn of the 1.75% May-41 bond.
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In local morning trade, NZGBs are unchanged after US tsys finished with a modest twist-steepening.

  • The markets shook off the announcement aftermarket yesterday that President-elect Trump planned to impose 25% tariffs on Mexico and Canada, and an additional 10% on Chinese imports. There was also little impact on the announcement of a cease-fire between Israel and Hezbollah.
  • The FOMC minutes were also taken in stride.
  • The RBNZ is widely expected to cut rates by 50bp at today's policy meeting, which also releases updated staff forecasts. The discussion could be centred around 25bp, 50bp or even 75bp of easing though.
  • Inflation is in the RBNZ's target band, and weak growth and excess capacity persist, so there is no reason to slow down to 25bp. Monthly data is signalling that while the economy is still soft, it may be stabilising, so there is no need to panic and cut by 75bp.  
  • The market anticipates a 55bp cut at today's policy meeting, with a cumulative 96bps of easing by February and 144bps by July.
  • Swap rates are unchanged.
  • Tomorrow, the NZ Treasury plans to sell NZ$250mn of the 3.0% Apr-29 bond, NZ$175mn of the 3.5% Apr-33 bond and NZ$75mn of the 1.75% May-41 bond.