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BONDS: NZGBS: Yesterday’s Rally Extends, Tracking US Tsys

BONDS
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NZGBs closed 1-2bps richer on a data-light session. NZGB yields are now 8-10bps lower than the mid-session high set following yesterday’s better-than-expected Q2 GDP.  

  • NZ PM Christopher Luxon expects fewer citizens will leave the country as interest rates fall and the economy begins to recover from a prolonged slump. “We have to build an opportunity economy,” Luxon said in a fireside chat at a Bloomberg Address in Auckland on Friday. “Where young people you can see that actually if you stay here and you work hard you can get ahead.”
  • With the local calendar light, NZGBs have largely tracked US tsys and ACGBs, with the NZ-US and NZ-AU yield differentials little changed on the day.
  • Cash US tsys are 1-2bps richer, with a steepening bias, in today’s Asia-Pac session after yesterday’s modest twist-steepening.
  • There is no US data today, but Fed speakers return. Data will resume on Monday with flash PMIs.
  • Swap rates closed 2bps lower to 1bp higher, with the 2s10s curve steeper.
  • RBNZ dated OIS pricing closed 1-2bps softer across meetings. A cumulative 82bps of easing is priced by year-end.
  • The local calendar sees Trade Balance data on Monday.
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NZGBs closed 1-2bps richer on a data-light session. NZGB yields are now 8-10bps lower than the mid-session high set following yesterday’s better-than-expected Q2 GDP.  

  • NZ PM Christopher Luxon expects fewer citizens will leave the country as interest rates fall and the economy begins to recover from a prolonged slump. “We have to build an opportunity economy,” Luxon said in a fireside chat at a Bloomberg Address in Auckland on Friday. “Where young people you can see that actually if you stay here and you work hard you can get ahead.”
  • With the local calendar light, NZGBs have largely tracked US tsys and ACGBs, with the NZ-US and NZ-AU yield differentials little changed on the day.
  • Cash US tsys are 1-2bps richer, with a steepening bias, in today’s Asia-Pac session after yesterday’s modest twist-steepening.
  • There is no US data today, but Fed speakers return. Data will resume on Monday with flash PMIs.
  • Swap rates closed 2bps lower to 1bp higher, with the 2s10s curve steeper.
  • RBNZ dated OIS pricing closed 1-2bps softer across meetings. A cumulative 82bps of easing is priced by year-end.
  • The local calendar sees Trade Balance data on Monday.