NZGBS: Cheaper Ahead Of Fed Chair Powell’s Speech At Jackson Hole

NZGBs closed cheaper, with benchmark yields 1-2bps higher.

• This came despite retail spending volumes falling 1.2% q/q in Q2, slightly weaker than the 0.9% decline expected from the market consensus. The Q1 climb in retail volumes was also revised down to 0.4% q/q.
• Trading volumes were light, and ranges were narrow today, however, ahead of Fed Chair Powell’s address at the Jackson Hole Symposium later today.
• Nevertheless, today's performance continues the ongoing reversal of much of the post-RBNZ rate cut rally. While the 2-year yield remains 11bps lower than pre-RBNZ levels, it has climbed 15bps since last Friday’s close. Interestingly, the 10-year yield is only 2bps lower than pre-RBNZ levels and 8bps higher than last Friday.
• Swap rates closed flat to 3bps higher, with the 2s10s curve steeper.
• RBNZ dated OIS pricing closed flat to 3bps firmer across meetings. A cumulative 71bps of easing is priced by year-end.
• Next week, the local calendar is empty on Monday and Tuesday, ahead of Filled Jobs data on Wednesday, ANZ Business Confidence on Thursday and Building Permits on Friday.