NZGBS: Cheaper & Steeper On BoJ Catch Up

NZGBs adjust to the cheapening observed in the core global FI space post-BoJ surprise, leaving the major benchmarks 5-10bp cheaper, with bear steepening in play.

• Meanwhile, swap rates are flat to a couple of bp cheaper after catching the initial payside post-BoJ impulse on Tuesday.
• RBNZ-dated OIS is virtually unchanged when it comes to the tightening showing for the Feb ’23 meeting and terminal OCR.
• Local data flow revealed a slightly narrower trade deficit in November, as the measure continues to tick away from the record deficit registered back in August.
• Elsewhere, we saw another record low in the monthly ANZ consumer confidence print. The survey collator noted that “just like our Business Outlook survey, there appears to some post-MPS shock value in these figures. The RBNZ came out guns blazing in the November MPS, signalling further aggressive OCR hikes in 2023 and a technical recession. That’s clearly spooked the horses, but it’s not yet clear exactly how far they have bolted. All eyes are now on the degree of follow-through from businesses reporting negative employment intentions, and consumers saying they will significantly tighten their belts.”
• Looking ahead, much of the focus in Asia-Pac hours will continue to fall on JGB market dynamics.