May 30, 2024 22:28 GMT
NZGBs Follow US Yields Lower, Bond Auctions Shortly
BONDS
In local morning trade, NZGBs are 6-7bps richer after US treasury futures ticked higher on slightly higher than expected weekly initial jobless claims, and lower continuing claim, GDP was in-line at 1.3% while Personal Consumption slips to 2.0% from 2.5% prior (2.2% est).
- NZGB curve is tighter today, the 2y is -5.9bps at 4.88%, while the 10yr is -6.8bps at 4.807%.
- The new NZ government presented its first budget and delivered the income tax cuts promised in the 2023 election. Finance minister Willis said that the cuts worth $14.7bn over 4 years would be offset fully by “savings and revenue initiatives” thus not adding to inflationary pressure. Slower growth has contributed to the deterioration in the budget position.
- The NZ Treasury will offer $NZ2b in June, with each weekly auction to offer $NZ500m. It is expected that the Treasury will tap the May 2028 bond.
- Swap rates are flat to 1.5bps lower
- RBNZ dated OIS pricing is little changed for meetings out to Feb-25, A cumulative 21bps of easing is priced by year-end.
- Later today we will have 7yr, 10yr and 15yr bond auctions
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