Cheaper, Commodity Prices Lower, S&P Comfortable With Credit Rating

NZGBs closed on a weak note, with benchmark yields 4-7bp higher. The hasn’t been much in the way of domestic drivers to highlight other than the commodity price index (see below).

• Swap rates are 1-5bp higher, with implied swap spreads tighter.
• RBNZ dated OIS pricing is flat to 2bp softer across meetings.
• NZ Finance Minister Robertson has defended the central bank’s dual mandate as “normal” and not something that’s caused inflation or interest rates to be unnecessarily high. “The BoE, the US Fed and the RBA all have forms of mixed mandates,” Robertson said. (See link)
• NZ's commodity export prices fell 2.9% m/m (-14.2% y/y) in August versus -2.6% in July, according to ANZ. Dairy prices led m/m decline, falling 8.7%. Global demand for dairy products is weak, led by softer demand from China. At the same time, the supply of dairy products from NZ is lifting which is putting downward pressure on prices: ANZ.
• S&P Global Ratings is “reasonably comfortable” with NZ’s AA+ sovereign credit rating, Melbourne-based credit analyst Martin Foo said Tuesday in an interview broadcast by Newshub. (See link)
• Tomorrow the local calendar sees Volume of All Buildings. for Q2.