NZGBs Off Lows, Lack Of Idiosyncratic Drivers Leaves Wider Themes At The Fore

The latest round of speculation surrounding the potential for another meaningful fiscal U-turn in the UK allowed the NZGB space to unwind the bulk of its early session losses, with the major benchmarks running 0.5bp cheaper to 1.0bp richer at the close, as the curve twist flattened, pivoting around 5s.

• A slowing of the headline rate of expansion in the latest domestic m’fing PMI survey had little impact, with all of the major sub-metrics outside of finished stocks exhibiting a slower rate of expansion or moving into contractionary territory.
• Elsewhere, comments from NZ FinMin Robertson re: the need to slow spending to head off inflation (in a global context) received little attention, as you would expect given the well-developed inflationary narratives.
• RBNZ dated OIS indicates a terminal OCR of just under 5.00%, marginally higher on the day.
• Looking ahead, Q3 CPI data headlines next week’s NZ docket, with a slight moderation expected in both the Y/Y & Q/Q headline metrics (although the BBG median consensus looks for +6.5% Y/Y, well above the RNZ’s 1-3% target band).