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NZGBS: Slightly Richer, Subdued Trading In US Tsys Ahead Of Weekend

BONDS

In early local trade, NZGBs are slightly richer after a subdued NY session on Friday and ahead the FOMC decision on Wednesday. US tsys finished around 1bp richer in the absence of significant data or domestic drivers.

  • Friday's focus was largely on headline risk that pointed to a deal on Russian grain.
  • Projected rate hike expectations were stable on Friday with a 96% chance attached to a 25bp rate hike this week. Fed terminal holding at 5.405% in Nov'23. Fed speakers remain in blackout ahead of Wednesday's policy announcement.
  • Swap rates are 1-2bp lower with the 2s10s curve flatter.
  • RBNZ dated OIS pricing is slightly softer across meetings. Terminal OCR expectations sit at 5.69%, just off the highest level since early July.
  • This week the local calendar is relatively light with Trade Balance (Jun) data today and ANZ Consumer Confidence (Jul) on Friday.
  • In Australia, Judo Bank PMI data is released today ahead of Q2 CPI on Wednesday.
  • Globally, data picks up slightly today with S&P Global PMIs.
  • On Thursday the NZ Treasury plans to sell NZ$225mn of the 0.5% May-26 bond, NZ$225mn of the 1.5% May-31 bond and NZ$50mn of the 2.75% May-51 bond.

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