NZGBS: Richen After New Supply Syndication

NZGBs reverse morning underperformance versus $-Bloc peers after pressure surrounding the issue of the new NZGB May-30 via syndication passed (NZ$4bn vs. the range of NZ$3-5bn, likely limited by a want to avoid the cheap extreme of the initial pricing range).

• After cheapening as much as 6-7bp pre-issuance, NZGBs closed flat to 2bp cheaper with the NZ/US and NZ/AU 10-year differentials 3bp and 1bp tighter, respectively (pre-RBA decision).
• Swaps closed 4-5bp cheaper with the 2s10s curve unchanged.
• RBNZ dated OIS were +2-6bp firmer across meetings with Nov-23 and Feb-24 leading. April meeting pricing remained around 40bp of tightening with terminal OCR pricing back at the RBNZ’s projected peak of 5.50%.
• YtD NZ deficit readings were marginally deeper than expected, while Finance Minister Robertson noted the impending headwinds on the fiscal front re: the cyclone rebuild, but stressed that government finances are well placed to deal with both that and the cost of living pressures households are facing.
• With the local data calendar light until February’s card spending data (Thu), the market will be fixed on the raft of central bank events over the coming days, starting with this evening's speech on monetary policy by RBNZ Governor Orr at a private event in London and Fed Chair Powell’s semi-annual testimony to Congress.
• A reminder that the delayed impulse from the RBA decision will be felt tomorrow morning, hwen NZGBs re-open.