NZGBS: Little Changed, US Tsys Cheaper on Friday, Pre-Election Fiscal Update Tomorrow

In local morning trade, NZGBs are 1bp cheaper after US tsys finished higher in yield ahead of the weekend led by the front end. In the absence of significant economic data, the 2-year yield increased 4bps to close the week at 4.99%, while the 10-year yield increased 2bps to 4.26%. There is $44 billion of 3-year treasury supply later today ahead of 10 and 30-year auctions later in the week.

• The Atlanta Fed GDPNow tracker for Q3 was unchanged at 5.6% following Friday’s wholesale trade report (changes in inventories are still seen providing a strong 1.4pps to quarterly growth) versus 2.1% in Q2. It is particularly strong when compared to other regional Fed trackers, with Friday’s relaunching of the NY Fed’s take at 2.25% for Q3.
• Swap rates are unchanged.
• RBNZ dated OIS pricing is little changed for meetings out to May'24 and 1-2bp softer beyond.
• Today, the local calendar is empty, a prelude to the Pre-Election Economic and Fiscal Update set for tomorrow. It is worth noting that economic conditions have taken a downturn since the Treasury's Budget publication in May. Consequently, the Treasury is expected to unveil around a NZ$15bn cumulative deficit increase out to 2026/27, with a substantial surge in the government's projected borrowing program. Additionally, tomorrow, we see Retail Card Spending and Net Migration data.