NZGBS: Sharply Richer After Q4 GDP Miss, US Tsys Bull-Steepen After FOMC

In local morning trade, NZGBs are sharply lower across benchmarks, with yields 8-9bps lower, after Q4 GDP printed -0.1% q/q (-0.3% y/y) versus expectations of +0.1% (0.0% y/y). The estimate range was -0.7% to +0.4%.

• (Bloomberg) -- New Zealand’s economy unexpectedly contracted in the final three months of last year, confirming a recession, as high interest rates continue to dampen consumer spending and investment. (See link)
• A post-FOMC bull-steepening has also supported the local market’s bid. The FOMC left policy unchanged, as expected. Revisions to the Fed funds path, as well as on the economy and inflation were all hawkish. However, Fed Chair Powell said "the story is the same one," meaning rate cuts are still on the cards and the Fed is confident it will achieve its objectives over time.
• Swap rates are 7-13bps lower, with the 2s10s curve steeper.
• RBNZ dated OIS has shunted lower with pricing 8-13bps softer for meetings beyond July. A cumulative 73bps of easing is priced by year-end.
• Today, the NZ Treasury plans to sell NZ$250mn of the 1.5% May-31 bond and NZ$250mn of the 3.5% Apr-33 bond.