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BONDS: NZGBS: Very Strong Session, Focus On Wednesday’s RBNZ Policy Decision

BONDS
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NZGBs closed 10-11bps richer, with the 10-year outperforming its $-bloc counterparts.

  • This move came despite Q3 retail sales volumes falling less than expected and less than in Q2, which saw a sharp fall of 1.2% q/q. Q3 was down 0.1% q/q and 2.7% y/y.
  • However, ten of the fifteen retail sectors contracted in the quarter, signalling that household spending remains very weak as monetary policy is still restrictive and the 75bp of easing to date will take time to feed through to consumers.
  • NZGB’s strength today was also aided by cash US tsys, which are 4-6bps richer in today’s Asia-Pac session, following Trump’s announcement of Bessent as Treasury Secretary. Bessent is seen as a Fiscal Hawk, with the market of consensus he will be positive overall for the economy and markets.
  • Swap rates closed 9bps lower.
  • RBNZ dated OIS pricing closed 1-5bps softer across meetings. A cumulative 97bps of easing is priced by February, with 55bps for this Wednesday.
  • Tomorrow, the local calendar is empty ahead of the RBNZ policy decision on Wednesday.
  • On Thursday, 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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NZGBs closed 10-11bps richer, with the 10-year outperforming its $-bloc counterparts.

  • This move came despite Q3 retail sales volumes falling less than expected and less than in Q2, which saw a sharp fall of 1.2% q/q. Q3 was down 0.1% q/q and 2.7% y/y.
  • However, ten of the fifteen retail sectors contracted in the quarter, signalling that household spending remains very weak as monetary policy is still restrictive and the 75bp of easing to date will take time to feed through to consumers.
  • NZGB’s strength today was also aided by cash US tsys, which are 4-6bps richer in today’s Asia-Pac session, following Trump’s announcement of Bessent as Treasury Secretary. Bessent is seen as a Fiscal Hawk, with the market of consensus he will be positive overall for the economy and markets.
  • Swap rates closed 9bps lower.
  • RBNZ dated OIS pricing closed 1-5bps softer across meetings. A cumulative 97bps of easing is priced by February, with 55bps for this Wednesday.
  • Tomorrow, the local calendar is empty ahead of the RBNZ policy decision on Wednesday.
  • On Thursday, 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.