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NZGBS: Cheaper After Tuesday’s Outperformance

BONDS

NZGBs trade on the defensive early Wednesday, with the major benchmarks running 5bp cheaper. This comes in the wake of Tuesday’s relative outperformance for the space (NZIER QSBO related), and perhaps indicates a little bit of setup for a potential hawkish BoJ outcome, with local market participants largely looking through the latest dovish ECB sources piece from BBG (released Wednesday).

  • Swap rates are 2-5bp higher as that curve steepens, resulting in slightly mixed swap spread performance.
  • RBNZ dated OIS is showing 61bp of tightening for next month’s meeting after nearly fully pricing in a 75bp in recent weeks, while terminal OCR shows just above 5.45%, with those metrics softer at the margin early Wednesday.
  • Card spending data saw a M/M fall in Dec, while the latest REINZ house price data continued to pull lower as the impact of the RBNZ’s expeditious tightening cycle continues to filter through into those metrics.
  • Regional Asia-Pac focus will fall on the latest BoJ decision, with the market primed for another hawkish tweak to the Bank’s YCC settings, even though nearly all surveyed economists look for the bank to leave its policy settings unchanged (with varying degrees of conviction).
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
HomepageBond Market NewsBulletMarketsFixed Income Bullets
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
HomepageBond Market NewsBulletMarketsFixed Income Bullets

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