NZGBs Holding Cheaper, Tight Ranges After Early Catch Up

NZGBs saw 7-10bp of cheapening across the curve (with the weakness driven by 10s) after the long holiday weekend. While the move was not limited in isolation, it came on the heels of the much more notable moves in core global FI markets seen since Friday’s local market close.

• The adjustment higher in yields came shortly after the market open, on the back of global forces.
• Early Tuesday comments from RBNZ Governor Orr reiterated the idea that the Bank still has some work to do, but he did note that the tightening cycle is “already very mature.” A reminder that the peak in the Bank’s OCR track currently stands at ~4.10% (per the most recent MPS).
• TD Securities & BNZ become the latest to up their RBNZ terminal rate view (4.50% for the former & 4.25% for the latter).
• RBNZ OIS price a terminal rate of ~4.85%, ~10bp above that seen late on Friday.
• Looking ahead, Thursday will see the release of the latest ANZ business survey, while Friday will see the same collator present its consumer confidence readings. These are the last key data releases that will cross ahead of next week’s RBNZ decision, with markets pricing ~53-54bp of tightening for that event.