NZGBS: Closed At Or Near Cheaps, Awaits US PCE Deflator

NZGBs closed with benchmark yields 5-8bp higher as the local market digested the surge in US tsy yields overnight, ahead of the all-important US PCE deflator data for May later today. Domestic drivers were scarce other than the previously mentioned consumer confidence data.

• Swap rates are 8bp higher with the 2s10s curve unchanged and implied long-end swap spreads wider.
• RBNZ dated OIS pricing closed flat to 11bp firmer across meetings with May’24 leading. Terminal OCR expectations closed at 5.65%.
• Central banks globally need to review their performance during the Covid-19 pandemic and acknowledge any policy errors, according to Bob Buckle, Emeritus Professor, Victoria University of Wellington and an external member of the RBNZ MPC in his address at the NZAE conference. (See link)
• The local calendar next week sees Building Permits (May) on Monday, NZIER Business Opinion Survey on Tuesday, and CoreLogic House Prices and the NZ Government’s 11-mth Financial Statement on Wednesday.
• In Australia, the focal point will be the RBA policy decision on Tuesday.
• The NZ Treasury also plans to sell NZ$250mn of the 0.5% 15 May 2026 bond, NZ$2000mn of the 2.0% 15 May 2032 bond and NZ$50mn of the 1.75% 15 May 2041 bond on Thursday.