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NZGBS: Spikes Richer With Global Bonds After Israel Strikes Iran

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NZGBs closed 4bps richer, aligning with the significant rally in global bonds during today's Asia-Pacific session, driven by reports of Israeli missile strikes on sites in Iran, as reported by ABC.

  • Markets had moved ahead of the confirmation with reports regarding the closing of Iranian airspace. It appears flights had been diverted away from Iranian Airspace. There seemed to be little flight activity over central Iran where the explosions occurred near Isfahan.
  • Cash US tsys are dealing 6-9bps richer across benchmarks but off the Asia-Pac session's best levels.
  • Swap rates closed 3-4bps lower.
  • RBNZ dated OIS pricing closed 3-7bps softer for meetings beyond July. A cumulative 60bps of easing is priced by year-end.
  • Bloomberg reported that ANZ said the RBNZ will only pivot to an easing stance when it is sure it has domestic inflation under control, which will take until next year. While headline inflation will drop to 2.6% in the third quarter this year, returning to the Reserve Bank’s 1-3% target band for the first time since early 2021, that won’t be enough to trigger rate cuts.
  • The next major release is Trade Balance data for March on Wednesday. Australia is also scheduled to release Q1 CPI data on Wednesday.
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NZGBs closed 4bps richer, aligning with the significant rally in global bonds during today's Asia-Pacific session, driven by reports of Israeli missile strikes on sites in Iran, as reported by ABC.

  • Markets had moved ahead of the confirmation with reports regarding the closing of Iranian airspace. It appears flights had been diverted away from Iranian Airspace. There seemed to be little flight activity over central Iran where the explosions occurred near Isfahan.
  • Cash US tsys are dealing 6-9bps richer across benchmarks but off the Asia-Pac session's best levels.
  • Swap rates closed 3-4bps lower.
  • RBNZ dated OIS pricing closed 3-7bps softer for meetings beyond July. A cumulative 60bps of easing is priced by year-end.
  • Bloomberg reported that ANZ said the RBNZ will only pivot to an easing stance when it is sure it has domestic inflation under control, which will take until next year. While headline inflation will drop to 2.6% in the third quarter this year, returning to the Reserve Bank’s 1-3% target band for the first time since early 2021, that won’t be enough to trigger rate cuts.
  • The next major release is Trade Balance data for March on Wednesday. Australia is also scheduled to release Q1 CPI data on Wednesday.