NZGBS: Cheaper, NZ Treasury Secretary Warning About Long-Term Fiscal Pressures

NZGBs closed at session cheaps, with benchmark yields 2bps higher. That said, the session was subdued and directionless with the domestic calendar relatively light and cash US tsys closed for the Presidents Day holiday.

• Swap rates closed 4bps higher, with implied swap spreads wider.
• RBNZ dated OIS pricing is 1-9bps firmer across meetings, with November leading. A cumulative 38bps of easing is priced by year-end from a terminal rate of 5.64%. This compares with around 100bps of easing from an expected OCR peak of 5.53% in late January.
• NZ bonds held by foreigners rose to 61.6% in January from 61.3% prior.
• (Bloomberg) -- NZ Treasury Secretary McLiesh has issued a warning about the state of the country’s finances, saying it needs to address long-term fiscal pressures now even as persistent budget deficits make that more difficult. (See link)
• (Bloomberg) -- NZ Government is taking action “to curb the surge in welfare dependency that occurred under the previous government”. (See link)
• Tomorrow, the local calendar is empty, ahead of PPI data on Wednesday.
• RBNZ Governor Adrian Orr will speak at a Business Canterbury lunch on March 1. He will discuss factors impacting NZ’s economy from both a domestic and international perspective, and what to expect from the year ahead.