Free Trial

NZGBS: Bear Flattening Extends, RBNZ Pricing Continues To Adjust Higher

BONDS

Thursday’s weakness in U.S. Tsys has allowed NZGBs to extend on their own Thursday cheapening, with the major benchmarks running 4-7bp lower as the pull away from YtD yield lows extends and the curve flattens again. Swap rates have moved in the same direction, albeit in a more measured manner, showing ~3bp higher across the curve, resulting in swap spread tightening. The 2-/10-Year swap spread has generally consolidated in February, after the pull away from cycle extremes (deepest inversion since the GFC) in late ’22.

  • RBNZ dated OIS firms again this morning, leaving just over 60bp of tightening priced for this month’s meeting, alongside pricing of a terminal OCR of ~5.40%.
  • The BusinessNZ manufacturing PMI moved back into expansionary territory, printing above the breakeven 50.0 level for the first time since September.
  • Elsewhere, domestic card spending data ticked higher in M/M terms, with total card spending breaking a run of two consecutive months of declines lodged at the end of ’22.
  • We don’t have anything in the way of meaningful domestic risk events slated ahead of the weekend, which will leave cross-market gyrations, as well as any spill over from the RBA’s SoMP and Chinese inflation data front and centre during the remainder of Friday trade.
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.