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NZGBS: Drifted Cheaper With ACGBs Pre-RBA


With US tsys closed for observance of the 4th of July holiday, NZGBs have been guided by a cheapening in ACGBs ahead of the RBA policy decision. NZGBs closed 6-8bp cheaper across benchmarks with the NZ/AU 10-year yield differential unchanged on the day at +59bp.

  • Swap rates are 4-5bp higher with the 2s10s curve 1bp flatter.
  • RBNZ dated OIS pricing closed 2-3bp firmer for ’24 meetings. Terminal OCR expectations sit at 5.67%, 17bp above the current OCR of 5.50%.
  • According to the latest NZIER quarterly survey of business opinion, a net 59% of businesses anticipate a deterioration in business conditions in Q2, slightly down from the previous figure of 63%. Notably, the survey highlighted a considerable decrease in capacity utilization among builders and manufacturers. Furthermore, the survey indicated that a net 10% of firms reported difficulties in finding unskilled labour, a notable improvement from the previous quarter's figure of 37%.
  • Tomorrow the local calendar will see CoreLogic House Price data and the NZ Government’s 11-month Financial Statement.
  • As the local market has already closed prior to the RBA policy decision, tomorrow's opening is anticipated to be influenced not only by the overnight movements in global bonds but also by the Australian market's reaction to the announcement.

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