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BONDS: NZGBs Close Richer As Curve Bull-Flattens

BONDS
BulletMarketsFixed Income Bullets

NZGBs have closed richer today, outperforming the move made on Friday in US tsys. In has been a very slow session

  • New Zealand’s Treasury Department acknowledges a deeper-than-expected economic downturn but remains optimistic about a recovery beginning in early 2025, as highlighted in its Fortnightly Economic Update. Indicators such as improving consumer and business confidence, easing inflationary pressures, and higher card spending suggest the worst may be over. However, they caution that future GDP revisions could remain larger than usual.
  • NZ's residential mortgage lending in November totaled NZ$7.41b, up 13% y/y but down 4% m/m after seasonal adjustment. First-home buyers accounted for NZ$1.5b (20.2% of total), a 3.7% annual decline, while investors borrowed NZ$1.6b, up 41% y/y. The number of new mortgage commitments fell 1.5% m/m to 18,981.
  • US Cash tsys are trading +/- 0.5bps, curve slightly flatter. The 10yr hovers just above the 4.50% level at 4.52%.
  • NZGBs curve has bull-flattened today, the 2yr is -2.8bps and trades at yearly lows, while the 10yr is -8.4bps at 4.446%. The 3s10s is +0.5bps at trades at its steepest level this year.
  • RBNZ dated OIS is pricing is little changed today with 54.7bps of cuts for the Feb meeting, and 100bps of cumulative cuts are now priced in by May. There is a cumulative 124bps of cuts priced in through to October 2025.
  • There is no further data out for New Zealand this year.
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NZGBs have closed richer today, outperforming the move made on Friday in US tsys. In has been a very slow session

  • New Zealand’s Treasury Department acknowledges a deeper-than-expected economic downturn but remains optimistic about a recovery beginning in early 2025, as highlighted in its Fortnightly Economic Update. Indicators such as improving consumer and business confidence, easing inflationary pressures, and higher card spending suggest the worst may be over. However, they caution that future GDP revisions could remain larger than usual.
  • NZ's residential mortgage lending in November totaled NZ$7.41b, up 13% y/y but down 4% m/m after seasonal adjustment. First-home buyers accounted for NZ$1.5b (20.2% of total), a 3.7% annual decline, while investors borrowed NZ$1.6b, up 41% y/y. The number of new mortgage commitments fell 1.5% m/m to 18,981.
  • US Cash tsys are trading +/- 0.5bps, curve slightly flatter. The 10yr hovers just above the 4.50% level at 4.52%.
  • NZGBs curve has bull-flattened today, the 2yr is -2.8bps and trades at yearly lows, while the 10yr is -8.4bps at 4.446%. The 3s10s is +0.5bps at trades at its steepest level this year.
  • RBNZ dated OIS is pricing is little changed today with 54.7bps of cuts for the Feb meeting, and 100bps of cumulative cuts are now priced in by May. There is a cumulative 124bps of cuts priced in through to October 2025.
  • There is no further data out for New Zealand this year.