NZGBS: Closed Cheaper, Election Tomorrow, Q3 CPI On Tuesday

NZGBs closed 5-9bps cheaper but off the session’s worst levels. The previously outlined manufacturing PMI and card spending data failed to provide a market-moving event. Indeed, local participants appeared to be more interested in Asia-Pac dealings for US tsys after yesterday's heavy post-CPI NY session.

• US tsys have moved away from lows seen in yesterday's NY session as losses are trimmed in Asia-Pac trade on Friday. Perhaps participants are using the opportunity to close short positions. This leaves cash tsys 1-2bps richer across the major benchmarks. TYZ3 deals at 107-13+, +0-06 versus NY closing levels.
• Swap rates are 3-9bps higher, with the 2s10s curve steeper and implied swap spreads tighter at the short end.
• RBNZ dated OIS is flat to 3bps firmer across meetings, with Oct’24 leading. Terminal OCR expectations sit at 5.70%.
• Tomorrow, NZ holds a general election, with opinion polls indicating the main opposition National Party will be best placed to form a centre-right government with the support of the libertarian ACT Party and the nationalist NZ First Party.
• Next week, the local calendar is empty on Monday, ahead of Q3 CPI on Tuesday. Bloomberg consensus expects +1.9% q/q and +5.9% y/y versus +1.1% and +6.0% in Q2.