NZGBS: Closed With A Twist Flattening Of the Curve

NZGBs closed with a twist-flattening of the 2/10 curve. Benchmark yields closed 1bp lower to 2bps higher. NZGBs opened on a weaker note, influenced by the negative performance of US tsys during the NY session. However, they rebounded from their session cheaps as JGBs rallied in anticipation of the BOJ’s policy decision.

• However, the local market couldn't sustain its best levels either, primarily due to a paring of JGB gains after the BOJ decision.
• US tsys have probed their NY session lows in Asia-Pac trade, although ranges have been narrow.
• Nevertheless, it's worth noting that NZGBs outperformed their counterparts in the $-bloc, with the NZ-US and NZ-AU 10-year yield differential 3-4bps lower.
• The swaps curve has twist-flattened at the close, with rates 3bps lower to 2bps higher.
• RBNZ dated OIS pricing closed little changed.
• NZ's trade deficit widened to NZ$2.291bn in August from a revised NZ$1.177bn in July. Exports to China declined 5.8% m/m (-18% y/y), while exports to Australia rose 1.3% m/m (-9% y/y).
• Next week the local calendar is empty until ANZ Business Confidence on Thursday.
• Next Thursday the NZ Treasury plans to sell NZ$225mn of the 3.0% Apr-29 bond, NZ$200mn of the 4.25% May-34 bond and NZ$75mn of the 2.75% May-51 bond.