NZGB Steepening Extends Through The Session

The bear steepening pressure derived from Thursday’s Tsy cheapening extended through the NZ session, with the major NZGB benchmarks running 8-15bp cheaper across the curve at the close.

• Local data had no real impact on the space.
• RBNZ OIS continues to more than fully price a 50bp hike at next week’s decision (albeit with a slight pullback to 51bp of tightening from the 54bp seen early on), with terminal rate pricing continuing to hover around the 4.80% mark.
• Westpac became the latest sell-side to up their terminal rate call, and now expect the OCR to peak at 4.50% in the current cycle, with the RBNZ set to hit that level in February, in their view.
• A quick reminder that all of those surveyed by BBG & RTRS look for the RBNZ to deploy a 50bp hike next week, so the tone of the statement that accompanies the decision will be key (assuming the fully priced and expected 50bp hike is delivered).