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NZGBS: Closed Richer, Light Local Calendar Until Thursday

BONDS

NZGBs closed near the session’s best levels, 2-3bps richer, after subdued trading.

  • The previously outlined Trade Balance data failed to be a market-mover despite total exports hitting a record monthly high.
  • Domestic spending on all cards fell 0.6% m/m, -0.1% y/y, in May according to RBNZ data.
  • NZ-US and NZ-AU 10-year yield differentials closed ~2bp tighter and flat respectively.
  • Swap rates are 3-4bps lower.
  • RBNZ dated OIS pricing is slightly softer for 2025 meetings. A cumulative 30bps of easing is priced by year-end.
  • “Investors are pricing in more rate cuts through end-2025 for New Zealand than Australia, but that divergence won’t last, according to a note Friday from Goldman Sachs strategists led by George Cole.” About 120bp of cuts are priced for the RBNZ through the end of next year vs ~50bp for the RBA, Goldman says (per BBG).
  • Tomorrow, the local calendar is empty, with the next data release being Consumer and Business Confidence on Thursday.

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