NZGBS: Global Cues Weigh
NZGBs are a touch cheaper to start the final session of the week, with Thursday’s weakness in core global FI markets leaking through. This leaves the major benchmark yields 2.5-4.0bp higher, with a light bear steepening impulse observed after yesterday’s notable richening. Hawkish ECB speak provided the main focal point of the broader Thursday session.
- Swap rates are higher on this dynamic, 4-5bp firmer across the curve, while major near-term RBNZ dated OIS pricing sits around yesterday’s closing levels, showing 61bp of tightening for next month’s meeting and a terminal OCR of ~5.40%.
- Local data has seen the latest BNZ manufacturing PMI survey print in contractionary territory for a third straight month (with a steady rate of contraction lodged as the headline sat at 47.2). The survey collator noted that “the negative mindset of manufacturers has picked up pace, with the proportion of negative comments at 63.5%. This compares with 58.4% for November, 61.6% for October and 61.5% for September. Labour shortages (skilled and unskilled) was a constant theme, as well as supply chain disruptions… broadly fits with the clear decline we already expect for manufacturing GDP in Q4 with further slippage expected in Q1."
- Wider macro cues will now set the tone ahead of the weekend, while Q4 CPI data headlines domestic maters next week.
- A deeper dive into the political situation in New Zealand after PM Ardern’s resignation can be found here.