NZGBS: Closed On A Strong Note, PM Downbeat On NZ Economy

NZGBs closed with a bull-steepening despite the negative lead from US tsy dealings on Friday. Benchmark NZGBs closed at the session’s best levels, with yields 1-3bps lower.

• With the domestic calendar fairly light (Performance Services Index and Non-Resident Bond Holdings), today’s move appears more likely linked to downbeat comments on the NZ economy from PM Luxon. “What we see is a deteriorating set of economic conditions in New Zealand. We’ve got inflation, we’ve got high interest rates, we’ve got a slowing economy, we’ll see GDP numbers out later this week, and we’ve obviously got a risk of rising unemployment. That’s the situation we’ve inherited.” It is however worth noting that the comments were similar to those made by the Finance Minister on Friday. (See link)
• US tsys are dealing little changed in today’s Asia-Pac session. The US calendar is empty today.
• Swap rates closed little changed.
• RBNZ dated OIS pricing closed is unchanged across meetings. A cumulative 57bps of easing is priced by year-end.
• Tomorrow, the local calendar is empty.
• In Australia, the RBA hands down its Policy Decision. Consensus among Bloomberg analysts is unanimous in expecting a status quo decision.