NZGBS: Slightly Cheaper, Narrow Ranges, Q2 GDP Next Thursday

NZGBs closed flat to 1bp cheaper after dealing a narrow range after the BusinessNZ manufacturing PMI failed to be a market mover.

• NZ’s Performance of Manufacturing Index contracted further in August, sliding to 46.1 from 46.6 in July on a seasonally adjusted basis, according to trade organization BusinessNZ. "While the key sub-index components of New Orders (46.6) and Production (43.9) improved slightly from July, the trend since March has seen them all but entrenched in contraction" said Catherine Beard, BusinessNZ’s Director of Advocacy.
• Given the absence of significant domestic catalysts, local market participants appeared to turn their attention overseas for guidance. US tsys, JGBs and ACGBs all displayed modest strength during the Asia-Pac session.
• Swap rates are flat to 1bp higher.
• RBNZ dated OIS pricing is flat to 2bp firmer across meetings, with terminal OCR expectations lifting 2bp to 2.64%.
• Next week the local calendar sees the Performance Services Index (Aug) and Non-Resident Bond Holdings (Aug) data on Monday, BoP Current Account Balance (Q2) on Tuesday, GDP (Q2) on Thursday and Trade Balance (Aug) on Friday.
• Next Thursday, the NZ Treasury plans to sell NZ$200mn of the 0.25% May-28 bond, NZ$225mn of the 2.0% May-32 bond and NZ$75mn of the 2.75% May-51 bond.