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NZGB Curve Flattens Tracking US Tsys, NZ Consumer Confidence Jumps

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The NZGB curve flattened today, with better buying through the 5-10yr part of the curve, the 10y yield dropped 5bps to 4.356%. There was little in the way of domestic drivers today, yields finished towards session's best, with equities finding some support.

  • NZ consumer confidence increased in July, with the index rising to 87.9. This boost in confidence comes amid expectations of significant interest-rate cuts over the next year. Inflation expectations fell to 3.7%, the lowest since September 2020.
  • The RBNZ is anticipated to start cutting rates soon due to falling inflation, rising unemployment, and a weak economy.
  • RBNZ dated OIS pricing closed relatively stable out to year end today, but soften 2-7bps for 2025 meetings
  • On a relative basis, the NZ-US and NZ-AU 10-year yield differentials continue to hover around their lowest levels since late 2022 at +11bps and +7bps respectively.
  • The 2s10s swaps curve has bull-steepened, with rates 2 to 5bps lower.
  • A 66% chance of a rate cut in August is currently priced in, with a cumulative 84.5% chance of a cut by October, before expectations jump sharply to three 25 bps cuts by year-end.
  • Next week data is light on with just Building Permits & ANZ Business Confidence on Wednesday
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The NZGB curve flattened today, with better buying through the 5-10yr part of the curve, the 10y yield dropped 5bps to 4.356%. There was little in the way of domestic drivers today, yields finished towards session's best, with equities finding some support.

  • NZ consumer confidence increased in July, with the index rising to 87.9. This boost in confidence comes amid expectations of significant interest-rate cuts over the next year. Inflation expectations fell to 3.7%, the lowest since September 2020.
  • The RBNZ is anticipated to start cutting rates soon due to falling inflation, rising unemployment, and a weak economy.
  • RBNZ dated OIS pricing closed relatively stable out to year end today, but soften 2-7bps for 2025 meetings
  • On a relative basis, the NZ-US and NZ-AU 10-year yield differentials continue to hover around their lowest levels since late 2022 at +11bps and +7bps respectively.
  • The 2s10s swaps curve has bull-steepened, with rates 2 to 5bps lower.
  • A 66% chance of a rate cut in August is currently priced in, with a cumulative 84.5% chance of a cut by October, before expectations jump sharply to three 25 bps cuts by year-end.
  • Next week data is light on with just Building Permits & ANZ Business Confidence on Wednesday