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NZGBS: Closed On Strong Note, Post-RBNZ Rally Continues

BONDS

NZGBs closed on a strong note, with benchmark yields 4-6bps lower.

  • Outside of the previously outlined Performance Services Index and REINZ House Sales, there hasn't been much in the way of domestic drivers to flag.
  • Cash US tsys have been closed during today’s Asia-Pac session due to a holiday in Japan.
  • Today’s move brings the cumulative post-RBNZ Decision rally to 19-29bps, with the 2/10 curve 10bps steeper.
  • It is also noteworthy that the NZGB 10-year yield finished at its lowest closing level this year at 4.45%.
  • On a relative basis, as well, the recent rally has been impressive, with the NZ-AU 10-year yield differential closing at +11bps, its lowest level since August 2022.
  • Swap rates closed 5-6bps lower.
  • RBNZ dated OIS pricing is 4-5bps softer for late-2024/2025 meetings. A cumulative 65bps of easing is priced by year-end.
  • Tomorrow, the local calendar will see Non-Resident Bond Holdings data, ahead of Q2 CPI on Wednesday. Bloomberg consensus expects the annual rate to decline to 3.4% from 4.0% in Q1.
  • On Thursday, the NZ Treasury plans to sell NZ$225mn of the 3.00% Apr-29 bond, NZ$225mn of the 4.25% May-34 bond and NZ$50mn of the 2.75% Apr-37 bond.
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