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NZGBS: Subdued Open, US Tsys Slightly Richer, IMF Eyes NZ Fiscal Outlook


In local morning trade, NZGBs are little changed after US tsys finished near the top of the range after see-sawing off lows by midmorning. No data or headline driver, with US tsys working off last week’s lows with a focus on this Friday's August employment report. Later today JOLTS Job Openings are due. US Tsys finished dealing 1-4bp richer across the major benchmarks, with a light bull steepening apparent.

  • Swap rates are unchanged, with implied swap spreads little changed.
  • RBNZ dated OIS pricing is unchanged, with terminal rate expectations at 5.65%
  • NZ’s central bank would need to consider raising interest rates further if the government fails to cut spending as planned, the International Monetary Fund said in its final Article IV Consultation on New Zealand published Tuesday in Wellington. “A re-ignition of inflation pressures, including due to insufficient fiscal consolidation, would call for a further tightening of monetary policy”. (See link)
  • A simple regression against the AU-NZ 1Y3M swap differential suggests the AU/NZ 10-year yield differential is around 20bp to negative. Speculation of a material fiscal deterioration in NZ is possibly weighing. (See link)
  • Today the local calendar is empty, ahead of Building Permits tomorrow. On Thursday, ANZ Business Confidence is on tap, with ANZ Consumer Confidence on Friday.

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