NZGBS: Slightly Cheaper After Yesterday's Strong Post-RBNZ Decision Rally

In local morning trade, NZGBs are 1-2bps cheaper after yesterday’s strong post-RBNZ decision rally. It comes despite US tsys finishing the NY session with modest gains. US tsys bull-steepened ahead of key PCE Deflator data later today, with yields 2-5bps lower. US tsys were supported following a flurry of balanced Fed speak.

• In an address to a parliamentary committee today, RBNZ Governor Orr said “Globally, policy interest rates may need to remain higher for longer than markets have been pricing over recent quarters. Central banks globally will be needing to hold the line.”
• He added that “What markets try and do is when they hear the word ‘comfort’ they think oh good they can cut. We’re saying no no. The Official Cash Rate needs to remain where it is for basically this calendar year.”
• Swap rates are 1bp higher.
• RBNZ dated OIS pricing is little changed after late 2024 meetings shunted around 20bps softer yesterday. A cumulative 69bps of easing is priced by year-end.
• Today, the local calendar will see ANZ Business Confidence.
• Today, the NZ Treasury plans to sell NZ$300mn of the 0.25% May-28 bond, NZ$150mn of the 3.5% Apr-33 bond and NZ$50mn of the 1.75% May-41 bond.