NZGBs Richer In Early Trading, 9-Month Budget Deficit Widens

In local morning trading, NZGBs are 3-5bps richer, it was a quiet Monday session for global rates with Japan and the UK out. Earlier we had NZ 9-month budget deficit which widened to NZ$5.04b

• US Tsys finish Monday's session steady to mixed, curves flatter with early session support in the short end evaporating as the session carried on, while investors preferred Treasury’s six-month bill auction over the three-month sale as markets now price in the first rate cut for November, from December prior to FOMC meeting last week.
• Swap rates are flat to 1bps higher
• RBNZ dated OIS pricing is 2bps softer this morning. A cumulative 44bps of easing is priced by year-end.
• NZ Nine-Month Budget Deficit widened to NZ$5.04 billion, NZ$619 million wider than projected, with core Crown revenue NZ$1.63 billion less than expected. Tax revenue, especially from company tax, fell short, but expenses were NZ$1.38 billion less than projected, partly due to reduced spending associated with weather events and regional grants. However, weaker state-owned enterprise results, including the KiwiRail project write-down, offset the stronger core Crown results, leaving net core Crown debt at 42.9% of GDP, slightly lower than the projection of 43%.
• Looking Ahead: NZ to Sell 7yr, 10yr 20yr bonds on Thursday and BusinessNZ Manufacturing PMI on Friday