NZGBs Hold Firm

NZGBs held on to the bulk of their early gains, after playing catch up to Tuesday’s richening in core global FI markets, showing little reaction to the contained swings in U.S Tsys that surrounded the ongoing U.S. midterm election results.

• That left NZGBs 7-9bp richer across the curve at the close, with swap spreads marginally mixed across the curve.
• News from the Treasury that the new green NZGB May-34 will launch next week (sized at NZ$2-3bn) may have resulted in some underperformance for the longer end of the NZGB curve, alongside swap spread tightening in that zone.
• RBNZ dated OIS came in a touch on the day, with terminal OCR pricing printing just below 5.40% vs. 5.45% late on Tuesday. Pricing for this month’s meeting was a touch softer as well, with just under 70bp of tightening now priced.
• Looking ahead, Thursday will see the release of the RBNZ’s Review and Assessment of the Formulation and Implementation of Monetary Policy, with manufacturing PMI data and the weekly round of NZGB issuance also slated.