NZGBS: Slightly Richer Ahead Of US Payrolls, RBNZ Policy Decision On Wednesday

NZGBs closed 1-4bps richer, with a flattening bias, ahead of the release of US Non-Farm Payrolls later today. Cash US tsys are dealing flat to 1bp richer, with a steepening bias, after yesterday’s 4^th of July holiday.

• Non-Farm Payrolls are expected to moderate in June after a surprisingly strong May. However, with heightened uncertainty around what is the genuine pace of employment growth, there could be a greater focus on the unemployment rate to assess labour market imbalances - See MNIs Payroll Preview here.
• The NZ Treasury sold $18.2bn worth of bonds this year as of July 4, according to Bloomberg calculations using official data. Issuance was up 68% compared to the same period last year.
• Swap rates are 1-4bps lower.
• RBNZ dated OIS pricing is flat to 1bp firmer across meetings. A cumulative 36bps of easing is priced by year-end.
• Next week, the local calendar is light until the RBNZ’s Policy Decision on Wednesday. A no-change decision is unanimously expected by economists surveyed by Bloomberg. Most economists don’t expect the RBNZ to make any major changes to its hawkish commentary, despite signs of downside risks to growth. Net migration is also on Wednesday, with its release before the RBNZ decision.