NZGBS: Closed On A Strong Note, RBNZ Gov. Orr Speaks Tomorrow

NZGBs concluded the trading day on a robust note, marked by a 13-14bp decrease in benchmark yields. US tsys have provided a favourable backdrop for the local session after yesterday’s rally and the extension of that strength in today's Asia-Pac session. Cash US tsys are 2-3bps richer across benchmarks.

• Moreover, the strength in local bonds was reinforced by two key factors: a more favourable-than-anticipated Operating Deficit for the Government and a decline in Net Migration.
• The positive momentum extended with support from ACGBs following disappointing Employment data, which bolstered buying interest.
• Additionally, strong demand was evident in the weekly NZGB supply, reflected in cover ratios ranging from 3.15x to 3.80x.
• Swap rates closed 8-14bps lower, with the implied short-end swap spread wider.
• RBNZ dated OIS pricing flat to 4bps softer across meetings. A cumulative 48bps of easing is priced by year-end.
• Tomorrow, the local calendar sees BusinessNZ Manufacturing PMI, along with a speech by RBNZ Governor Orr about “the changing drivers of inflation over the past couple of years and the shift from transitory to more stubborn underlying inflation” at the NZ Economics Forum.