NZGBS: Cheaper But Off Worst Levels, Labour Pool Expanding Quickly

NZGBs closed 2-3bp cheaper across benchmarks but off session cheaps in line with movements in US tsys and ACGBs in Asia-Pac trade. With the local calendar light for the remainder of the week, local participants are likely to continue to seek guidance from abroad.

• The RBNZ policy meeting is scheduled for Wednesday next week with the market attaching a 12% chance of a 25bp hike. Terminal OCR expectations currently sit at 5.67% versus the current OCR of 5.50%.
• Swap rates are flat to 6bp higher with the 2s10s curve steeper, and the implied swap spread box 4bp steeper.
• The ANZ commodity price index declined 2.3% m/m (-14.9% y/y) in June in NZD terms (1.2% m/m lower in USD) led by the meat, skins and wool sub-category.
• NZ’s pool of labour is expanding at the fastest pace in almost three years as the nation’s re-opened border allows more foreign workers to enter the market, said StatsNZ. (See link)
• Tomorrow the NZ Treasury plans to sell NZ$250mn of the 0.5% 15 May 2026 bond, NZ$200mn of the 2.0% 15 May 2032 bond and NZ$50mn of the 1.75% 15 May 2041 bond.