NZGBS: Little Changed Despite A Modest Richening For US Tsys

In local morning trade, NZGBs are 1bp cheaper after a relatively subdued start to a busy week. The 2-year yield declined 4bps to 4.02%, with the 4% level making for tough support. The 10-year rate was down 3.6bps to 3.904%.

• US tsys were supported by brewing geopolitical tensions in the Middle East and Eastern Europe.
• Swap rates are 1-2bps higher, with the 2s10s curve flatter.
• Locally, the week’s highlight will be the RBNZ Policy Meeting on Wednesday. 12 of 21 economists surveyed by Bloomberg expect no change, with 9 expecting a 25bp cut.
• RBNZ dated OIS pricing is 2-4bps firmer across meetings. The market attached a 50% chance of a 25bp cut this week versus 69% on Friday and 43% before RBNZ inflation expectations data last week. A cumulative 84bps of easing is priced by year-end.
• NZ’s light traffic index rises 1.5% m/m in July, while heavy traffic gauge gains 6.1% m/m. “The overall signal regarding economic activity remains weak, but the rebound suggests some of the dramatic fall in June was likely due to short-term factors like weather or roadworks”: ANZ (per BBG).
• Net Migration for June printed +2,710, with the annual rate slowing to +73,270.