NZGBs A Touch Firmer To Start The Week, RBNZ In View

NZGBs have started the week on the front foot, with the major benchmarks running 2-7bp richer across the curve, in a bull steepening move.

• This comes after Friday’s cheapening, with the space likely leaning on the richening observed in in UK Gilts on Friday.
• The RBNZ monetary policy decision headlines the domestic docket this week. The tone of the Bank’s statement will be key, with all of those surveyed by BBG looking for a 50bp hike in the OCR. Such an outcome is fully discounted by markets.
• Structurally, BNZ note “as we enter October, domestic focus is likely to shift to NZGBs’ forthcoming entry into the FTSE-Russell WGBI on 1 November. We have previously estimated there might be around NZ$2bn of offshore inflows into the government bond market in the first month of index inclusion and possibly up to NZ$4bn over the first three months, mainly from so-called ‘passive’ funds which seek to replicate the underlying benchmark.”