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BONDS: NZGBs Steady After Opening Cheaper, Economic Conditions "Challenging"

BONDS
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NZGBs opened the session cheaper and have moved very little throughout the session, yields have closed 1.5bps to 2.5bps cheaper, with the curve bear-steepening. It has been a slow session for APAC rates, with us tsys yields trading just off recent highs, after yields have risen for 5 straight session. 

  • New Zealand Prime Minister Christopher Luxon, speaking ahead of Tuesday’s Half-Year Economic and Fiscal Update, acknowledged challenging economic conditions but emphasized careful spending and fiscal adjustments to shorten deficits. He noted encouraging signs of economic improvement but stressed that more work remains to be done.
  • Auckland Airport reported a 3% y/y increase in total passenger movements for November, reaching over 1.6m. International passengers rose 3% to 861,532, driven by a 21% surge on East and Southeast Asian routes, supported by increased Chinese tourism. Domestic passenger movements also grew 3% to 771,247. Ytd, total passenger movements increased 2% to nearly 7.7m.
  • NZGBs curve has bear-steepened, the 2yr still hovers near yearly lows at 3.758%, up 1.5bps today, while the 10yr is +2.4bps at 4.430%. The 5s10s is 1bps higher at 48.30 and is nearing the yearly highs of 49bps, and almost 40bps steepening since August.
  • The OIS market has cooled 2bps to 41bps of cuts priced in for the Feb meeting after hitting a 46bps on Dec 3th. There is a cumulative 107bps of cuts priced in through to October 2025.
  • Tomorrow the NZ Treasury will release Half-Year Economic & Fiscal Update, followed by GDP on Thursday
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NZGBs opened the session cheaper and have moved very little throughout the session, yields have closed 1.5bps to 2.5bps cheaper, with the curve bear-steepening. It has been a slow session for APAC rates, with us tsys yields trading just off recent highs, after yields have risen for 5 straight session. 

  • New Zealand Prime Minister Christopher Luxon, speaking ahead of Tuesday’s Half-Year Economic and Fiscal Update, acknowledged challenging economic conditions but emphasized careful spending and fiscal adjustments to shorten deficits. He noted encouraging signs of economic improvement but stressed that more work remains to be done.
  • Auckland Airport reported a 3% y/y increase in total passenger movements for November, reaching over 1.6m. International passengers rose 3% to 861,532, driven by a 21% surge on East and Southeast Asian routes, supported by increased Chinese tourism. Domestic passenger movements also grew 3% to 771,247. Ytd, total passenger movements increased 2% to nearly 7.7m.
  • NZGBs curve has bear-steepened, the 2yr still hovers near yearly lows at 3.758%, up 1.5bps today, while the 10yr is +2.4bps at 4.430%. The 5s10s is 1bps higher at 48.30 and is nearing the yearly highs of 49bps, and almost 40bps steepening since August.
  • The OIS market has cooled 2bps to 41bps of cuts priced in for the Feb meeting after hitting a 46bps on Dec 3th. There is a cumulative 107bps of cuts priced in through to October 2025.
  • Tomorrow the NZ Treasury will release Half-Year Economic & Fiscal Update, followed by GDP on Thursday