NZGBS: Closed On A Soft Note, NZ-US 10Y Differential Widens

NZGBs closed 4bp cheaper at session cheaps ahead of tomorrow’s important data drop. Tomorrow the local calendar sees July Retail Sales Spending data along with the RBNZ’s Survey of Inflation Expectations. A lift in hospitality spending is expected to offset weakness elsewhere, according to Westpac, while inflation expectations look set to ease now that headline inflation is well past its peak.

• NZGBs have underperformed US tsys today with the NZ-US 10-year differential yield differential 5bp wider at +73bp.
• The long end of the tsy curve has extended gains through the Asia-Pac session. Today's slated 3-year issuance is possibly weighing on the short end. Ranges do remain narrow with little follow through, little meaningful macro news flow has crossed. This leaves cash tsys 1-6bp richer, the curve has bull flattened.
• Swap rates closed 2-3bp higher.
• RBNZ dated OIS closed little changed.
• Bloomberg reports that the NZ Treasury says the downturn in the housing market is nearing an end. Numbers of residential dwelling approvals appear to be stabilising as a surge in net migration helps stem the fall in both consents and house prices and helps lift rents for new tenancies. (See link)