Free Trial

NZGBS: Near Bests As RBNZ Conway Speaks


In his speech at the KangaNews DCM forum (currently underway), titled “The path back to low inflation in NZ”, RBNZ Chief Economist Conway reiterated some very familiar themes, namely that inflation remained too high and well above target, and that strong demand outstripped supply with employment clearly above its maximum sustainable level.

  • He did however note the conflict between monetary policy and financial stability and that in a stagflation environment of low growth, rising unemployment and high inflation, the optimal path for interest rates becomes less clear.
  • The market’s initial reaction has been muted with NZGBs holding 7-9bp richer on the day, but slightly off bests, after the stronger lead from U.S Tsys post-FOMC.
  • Swaps were 8-11bp stronger with implied swap spreads slightly tighter.
  • RBNZ dated OIS remains 3-9bp softer for meetings beyond April. Terminal OCR expectations drop to 5.17% with 22bp of tightening priced for April.

To read the full story


MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.