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NZGBS: Outperforms The $-Bloc, Consumer Confidence Tomorrow

BONDS

NZGBs closed at or near session bests, with benchmark yields 4-6bp lower, despite an improvement in business sentiment. With US tsys little changed in Asia-Pac dealing, the catalyst for afternoon strengthening appears to have been solid digestion of weekly supply. Cover ratios across the lines showed a 2.00x to 3.00x range with the longer-dated (May-31 and May-41) issues leading, albeit slightly less than the last time out. The bond lines are 1-2bp richer in post-auction trade.

  • The local market’s resilience sees NZGBs outperform the $-bloc with the NZ-US and NZ-AU 10-year yield differentials respectively 3bp and 2bp tighter.
  • Swap rates are 4-5bp lower.
  • RBNZ dated OIS pricing is flat to 3bp softer across meetings, with May'24 leading.
  • The business confidence index rose to -3.7 in August, its highest since June 2021, from -13.1 in July, according to ANZ Bank NZ. Business activity outlook rose to 11.2 from 0.8 in July. Inflation expectations eased to 5.06% from 5.14%. “Many firms appear to have been pleasantly surprised at how well demand has held up' and the Reserve Bank has stopped raising the OCR, which may be creating a sense that the worst is over”: ANZ
  • Tomorrow the local calendar sees ANZ Consumer Confidence data.

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