NZGBS: Closed On The Local Session’s Best Levels, Net Migration Strong

NZGBs closed at local session highs, with benchmark yields 3bps lower. There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined net migration data.

• Bloomberg reports that the record inflow of migrants adds to risks that inflation pressures may persist longer than the central bank expects, quoting ASB Bank Senior Economist Mark Smith, who said “We expect the RBNZ to take out insurance and to retain restrictive OCR settings.” (See link)
• Hence, local participants have likely been guided by US Tsy dealings in the Asia-Pac session. Cash US Tsys are 1bp cheaper to 5bps richer in Asia-Pac dealings, with the curve flatter.
• Swap rates are flat to 6bps lower, with the 2s10s curve and implied swap spread box flatter.
• RBNZ dated OIS pricing is little changed across meetings, with terminal OCR expectations at 7.70%.
• Tomorrow, the local calendar sees Food Prices, ahead of Business NZ Mfg PMI and Card Spending data on Friday.
• Tomorrow, the NZ Treasury plans to sell NZ$200mn of the 4.5% May-30 bond, NZ$225mn of the 2.0% May-32 bond and NZ$75mn of the 2.75% May-51 bond.