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NZGBS: Stronger After Dovish Hike From FOMC

BONDS

NZGBs open 7-8bp stronger after U.S Tsys richen on the back of a dovishly perceived hike from the Federal Reserve. As anticipated, the funds rate was raised 25bp, but with a softened tone. The FOMC indicated that it was watching for signs the recent banking crisis will tighten credit conditions. The dot plot peak of 5.1% however was unchanged from December with no hint of easing this year despite current market pricing of -72bp by year-end.

  • Swaps open 9-11bp richer, implying slightly wider swap spreads, with the 2s10s curve 2bp steeper.
  • RBNZ dated OIS opens 3-9bp softer for meetings beyond April. Terminal OCR expectations drop to 5.18% with 21bp of tightening priced for April.
  • The NZ Insurance Council announced provisional Cyclone Gabrielle claims totalling NZ$890mn.
  • On the data front, ANZ Heavy Truckometer printed today -0.7% M/M for February after +0.8% in January.
  • The Antipodean calendar is light for the remainder of the week with RBNZ Chief Economist Conway’s speech, “The path back to low inflation in NZ”, at the KangaNews DCM forum today (0015 GMT) the highlight.
  • The NZ Treasury is scheduled to sell NZ$200mn of 4.5% 15 April 2027 bond, NZ$150mn of 2.0% 15 May 2032 bond and NZ$50mn of 2.75% 15 April 2037 bond.
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