NZGBS: Closed Strongly, PPI Data Tomorrow

NZGBs closed 1-2bps richer after trading in relatively narrow ranges in today’s session. With the domestic calendar empty, local participants appear to have been content to sit on the sidelines as cash US tsys resumed dealings after yesterday’s holiday. US tsys are dealing flat to 2bps cheaper in today’s Asia-PAC session, with a steepening bias in place.

• Swap rates closed 1-4bps richer, with the 2s10s curve flatter.
• Long-dated implied swap spreads are tighter, possibly aided by the NZDM's announcement of the launch of a new May 2054 bond. The scheduled February 22 bond auction has been cancelled. The NZDM expects to issue at least NZ$2bn of the new bond via syndication, with a cap of NZ$4bn. Pricing will be on February 21, with guidance at -1 to +6 over May 2051 yield.
• RBNZ dated OIS pricing closed 1-3bps firmer across meetings. A cumulative 39bps of easing is priced by year-end.
• NZ’s economic slowdown continued into early 2024, the NZ Treasury said in Fortnightly Economic Update. “In an economy buffeted by big opposing forces, the downdraft from high-interest rates appears to be dominating the updrafts coming from net migration and still-strong employment and wage growth”
• Tomorrow, the local calendar will see PPI data.