NZGBS: Cheaper, Narrow Range, PM Wants Trade Diversification

NZGBs closed 1-3bp cheaper in the middle of the local session range. Construction work done fell in Q2 by 0.1% q/q versus the consensus estimate of +0.2%. Nevertheless, the data had minimal impact on the market, with the session’s range relatively narrow.

• 10-year NZGB underperformed its $-bloc counterparts, with the NZ-US and NZ-AU yield differentials respectively 1bp and 3bp wider at respectively +77bp and +88bp.
• Swap rates are -1bp lower to 2bp higher, with the 2s10s curve steeper.
• RBNZ dated OIS pricing is flat to 1bp firmer across meetings out to Jul’24.
• NZ’s government plans to focus on trade diversification to help insulate its economy from the slowdown in key trading partner China, Prime Minister Chris Hipkins said. “The slower-than-expected recovery in the Chinese economy has had an impact on New Zealand,” Hipkins told Bloomberg Television in Auckland Wednesday. “That is one of the reasons our government has been very focused on trade diversification.” (See link)
• Tomorrow the local data calendar is empty.
• Tomorrow the NZ Treasury plans to sell NZ$225mn of the 4.50% May-30 bond, NZ$175mn of the 2.00% May-32 bond and NZ$100mn of the 2.75% Apr-37 bond.