NZGBs Slightly Cheaper, Trade Balance Narrows

In local morning trade, NZGBs are higher across benchmarks, with yields 2-3bps higher. Earlier NZ trade balance data was released showing an improvement to the deficit at -NZ$218m from a revised -NZ%1,089m in Jan. The 12 month deficit is steadily improving from mid 2023 lows, near -NZ$17bn to now just under -NZ$12bn.

• (Bloomberg) -- Recession Is Back, Soft Path to Drive RBNZ Pivot. NZ has entered a recession as GDP fell 0.1% in Q4 2023, driven by declines in residential construction and inventories, while per-capita GDP also decreased for the fifth consecutive quarter, signaling challenges for the economy despite expectations of gradual recovery in 2024 amid significant monetary policy tightening. (See link)
• Swap rates are flat to 2bps higher this morning, while the 2s10s curve has slightly bear-steepened.
• RBNZ dated OIS has shunted lower post NZ GDP data on Thursday with pricing 8-13bps softer for meetings beyond July, the move has continued over the past 24 hours with pricing 3bps softer for meetings beyond October. A cumulative 76bps of easing is priced by year-end.
• Today, the calendar is light. Upcoming RBNZ's Conway speaks about Feb MPS on Tuesday