NZGBS: Cheaper, Outperforms ACGBs, Budget Tomorrow

NZGBs closed 6-7bps cheaper after dealing in relatively narrow ranges in today’s session. NZGBs did however outperform their antipodean counterpart after higher than expected Australian CPI monthly data for April. NZ-AU 10-year differential closed 7bps tighter at +48bps.

• Business Confidence fell 4 points to +11 in May while expected Own Activity fell 2 points to +12 and past own activity rose 2 points to -18, according to ANZ's Business Outlook Report.
• Swap rates closed 4-8bps higher, with the 2s10s curve steeper.
• RBNZ dated OIS pricing closed 2-6bps firmer for meetings beyond October. A cumulative 16bps of easing is priced by year-end.
• NZ’s government will present its first budget tomorrow. It promised tax cuts in the election but has been clear that it has found spending reductions to maintain fiscal responsibility. The timing of both will be important to the RBNZ.
• Building Permits data for April will be released ahead of the Budget tomorrow.
• Thursday’s usual weekly supply has been delayed until Friday, with the NZ Treasury planning to sell NZ$275mn of the 1.5% May-31 bond, NZ$175mn of the 4.25% May-34 bond and NZ$50mn of the 2.75% Apr-37 bond.