NZGBS: Curve A Touch Steeper On The Day

NZGBs held steeper on the day, with little in the way of net movement outside of the early catch up to Thursday’s moves in U.S. Tsys, leaving NZGB benchmarks 2-5bp cheaper at the bell. Swap rates generally mimicked those moves, leaving swap spreads little changed.

• Locally, Finance Minister Robertson outlined ~NZ$9-10bn rebuild costs for Cyclone Gabrielle, although he pointed to that being spread over “many years”, also telling BBG that he wanted to minimise the amount of borrowing deployed when it comes to funding the spending. Finally, Robertson conceded that it is possible that NZ is already in a technical resilience, but pointed to various areas of economic resilience that he hoped would result in a shallow and short-lived recession (in the case that scenario is realised).
• When it comes to RBNZ pricing, RBNZ-dated OIS continues to show 20bp of tightening for the Bank’s next meeting, while terminal OCR pricing continues to hover just below 5.50%.
• Locally, manufacturing PMI data moved back into contractionary territory after a two-month hiatus, although survey sponsor BNZ noted that "disappointing as New Zealand’s March PMI was, it wasn’t especially negative in longer-term context. Neither was it much out of line with manufacturing readings across the world of late.”
• Looking ahead, Q1 CPI data dominates next week’s local docket.