NZGBS: Closed Near Session Highs, Outperformed $-Bloc Peers

NZGBs closed at or near session bests, with benchmarks 3-6bps cheaper. The move away from session cheaps came despite a lift in ANZ business confidence and lacklustre demand metrics for weekly supply. The cover ratios for today’s auction lines were a low 1.65x to 2.44x. Nonetheless, the bond lines were 2-3bps richer in post-auction dealings, with the May-51 bond outperforming.

• The NZGB 10-year benchmark outperformed its $-bloc peers by 2-3bps.
• Swap rates are 2-4bps higher, with the 2s10s steeper.
• RBNZ dated OIS pricing is flat to 2bps firmer across meetings, with terminal OCR expectations at 5.77%.
• The business confidence index rose to 1.5 in September from -3.7 in August, according to ANZ. This was the first positive read since May 2021. The business activity outlook index fell to 10.9 from 11.2 in August. Inflation expectations eased to 4.95% from 5.06%. ANZ said the NZ economy is certainly patchy, and the rebound in activity indicators that’s been evident since the start of the year may be running out of steam, according to Bloomberg. Inflation pressures are gradually waning in the big picture, but not rapidly nor in a straight line: ANZ.
• Tomorrow the local calendar sees ANZ Consumer Confidence.