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NZGBS: Modestly Weaker With US Tsys, RBNZ Policy Decision Tomorrow

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In local morning trade, NZGBs are 2-3bps cheaper after US tsys finished Monday's session modestly weaker. The 2-year and 10-year yields were up around 2bps to 4.85% and 4.44% respectively.

  • Corporate debt issuance climbed over $15B, with rate lock hedging contributing to the early session selling. Pick-up in tsy quarterly futures roll from Jun'24 to Sep'24.
  • Vice Chair Barr said in prepared remarks for a keynote address that restrictive policy needs further time to do its work and that the Fed is in a good position to hold rates steady whilst it watches.
  • Otherwise, it was a generally quiet start to the week with no data until mid-week. Focus on the minutes from the May 1 FOMC on Wednesday.
  • Swap rates are 2-3bps higher.
  • Ahead of tomorrow’s Policy Decision, RBNZ dated OIS pricing is little changed, with only a 6% chance of a hike this week factored in.
  • Consensus also expects little change in tone from the central bank. The RBNZ is unlikely to give the nod to lower rates until it is more confident that inflation is on a clear path back to target. A cumulative 45bps of easing is priced by year-end.
  • Today, the local calendar is empty.
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In local morning trade, NZGBs are 2-3bps cheaper after US tsys finished Monday's session modestly weaker. The 2-year and 10-year yields were up around 2bps to 4.85% and 4.44% respectively.

  • Corporate debt issuance climbed over $15B, with rate lock hedging contributing to the early session selling. Pick-up in tsy quarterly futures roll from Jun'24 to Sep'24.
  • Vice Chair Barr said in prepared remarks for a keynote address that restrictive policy needs further time to do its work and that the Fed is in a good position to hold rates steady whilst it watches.
  • Otherwise, it was a generally quiet start to the week with no data until mid-week. Focus on the minutes from the May 1 FOMC on Wednesday.
  • Swap rates are 2-3bps higher.
  • Ahead of tomorrow’s Policy Decision, RBNZ dated OIS pricing is little changed, with only a 6% chance of a hike this week factored in.
  • Consensus also expects little change in tone from the central bank. The RBNZ is unlikely to give the nod to lower rates until it is more confident that inflation is on a clear path back to target. A cumulative 45bps of easing is priced by year-end.
  • Today, the local calendar is empty.