NZGBs Cheaper On The Global Drumbeat

The broader weakness observed in core global FI markets since Monday’s local close dragged NZGBs lower in early Tuesday trade, before fresh pressure for global core FI markets resulted in additional cheapening, with the major benchmarks running 12-13bp cheaper across the curve at the close, bear steepening.

• In the RBNZ's annual report Governor Adrian Orr reiterated the idea that "there is more work to do. Increasing the OCR is the most effective way we can reduce inflation and support maximum sustainable employment over the coming years, consistent with our monetary policy Remit. That is one of our key roles as a central bank and the best thing we can do for the long term economic wellbeing of all New Zealanders."
• RBNZ dated OIS indicated terminal rate pricing of just over 4.90%, advancing ~10bp on the day, with the move higher in global yields pushing that metric upwards as we moved through the session.
• Lower tier local data failed to impact the space in a meaningful manner, although firmer card spending data in September would have aided the cheapening in the background.
• Looking ahead, REINZ house sales and net migration data is due Tuesday.