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BONDS: NZGBS: Weaker, Trump Trade Policies To Add To Global Inflation: RBNZ

BONDS
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NZGBs closed on a weak note, with benchmark yields 2-3bps higher. The NZGB 10-year has underperformed since yesterday’s close with the NZ-US and NZ-AU yield differentials 6-7bps tighter.

  • Donald Trump’s trade policies will add to global inflation pressures but won’t threaten financial stability unless retaliation spirals out of control, according to the RBNZ. During a briefing on financial stability, RBNZ deputy governor Christian Hawkesby told Parliament independent central banks could easily manage this extra inflation pressure.
  • Traders are now shifting attention to the Federal Reserve’s interest-rate decision later today, where policymakers are expected to cut borrowing costs by 25bps. Cash US tsys are ~1bp richer in today’s Asia-pac session after yesterday’s savage post-election sell-off.
  • Today’s supply saw decent demand with cover ratios ranging from 2.45x (May-28) to 3.60x (May-54).
  • Swap rates closed 3-5bps higher, with the belly underperforming.
  • RBNZ dated OIS pricing closed 1-4bps firmer across meetings, with May 2025 leading. A cumulative 91bps of easing is priced by February, with 52bps by year-end.
  • The local data calendar is empty until next week's 2-year inflation expectations print.
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NZGBs closed on a weak note, with benchmark yields 2-3bps higher. The NZGB 10-year has underperformed since yesterday’s close with the NZ-US and NZ-AU yield differentials 6-7bps tighter.

  • Donald Trump’s trade policies will add to global inflation pressures but won’t threaten financial stability unless retaliation spirals out of control, according to the RBNZ. During a briefing on financial stability, RBNZ deputy governor Christian Hawkesby told Parliament independent central banks could easily manage this extra inflation pressure.
  • Traders are now shifting attention to the Federal Reserve’s interest-rate decision later today, where policymakers are expected to cut borrowing costs by 25bps. Cash US tsys are ~1bp richer in today’s Asia-pac session after yesterday’s savage post-election sell-off.
  • Today’s supply saw decent demand with cover ratios ranging from 2.45x (May-28) to 3.60x (May-54).
  • Swap rates closed 3-5bps higher, with the belly underperforming.
  • RBNZ dated OIS pricing closed 1-4bps firmer across meetings, with May 2025 leading. A cumulative 91bps of easing is priced by February, with 52bps by year-end.
  • The local data calendar is empty until next week's 2-year inflation expectations print.