NZGBS: Off Best Levels But Still Firmer At The Close

Intermediates led the catch-up rally on Thursday, as NZGBs drew support from Wednesday’s BoE-inspired price action in core global FI markets. That left the major NZGB benchmarks 11-14bp richer across the curve.

• The space moved away from best levels of the session into the weekly round of NZGB supply (which included Apr-27, May-32 & May-41 paper). The auctions ultimately passed smoothly enough, allowing fresh richening into the bell, albeit not enough for the space to force a retest of the day’s richest levels.
• The latest ANZ business survey saw an uptick for both the confidence (back to near enough flat) and conditions (which remains deep in negative territory) metrics, with the inflationary measures remaining “intense,” while there was only a “slight easing” in inflation expectations.
• ANZ consumer confidence and building permits data round off this week’s domestic data releases on Friday.
• Next week’s RBNZ monetary policy decision provides the major upcoming domestic risk event, with a touch above 50bp of tightening still priced and a terminal rate of just over 4.80% priced in, which is ultimately little changed on the day.