NZGBS: Cheaper But Volumes Low Due To Auckland Holiday

NZGBs closed 3bps cheaper, with volumes low due to Auckland being out for a public holiday. There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined trade balance data for December. The Australian and Japanese calendars were also light today.

• Early session strength following the weekend’s Middle East developments proved to be fleeting, with cash US tsys currently dealing flat to 1bp richer in today’s Asia-Pac session.
• Nevertheless, spillover from higher oil prices will remain the focus today, along with broader risk trends, after the attack on a Russian Oil tanker in the Red Sea late Friday and the weekend attack on US soldiers in Jordan near the border with Syria.
• Swap rates closed 1-3bps higher, with the 2s10s curve steeper.
• RBNZ dated OIS pricing closed slightly firmer across meetings. A cumulative 91bps of easing is priced by year-end.
• RBNZ Chief Economist Conway will deliver a keynote speech tomorrow. The speech will focus on the significant changes to the global economy since the COVID-19 pandemic. He will also make brief comments on domestic data developments since the November Monetary Policy Statement.