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BONDS
NZGB yields are 7-15bp higher after the decision with the curve flatter after the RBNZ surprised the market with a 50bp rate hike.
- The market pricing and BBG consensus had been expecting a stepped-down 25bp increase after the 50bp hike in February. The bank had considered both a 25bp and a 50bp hike at today’s meeting.
- With demand still exceeding supply the bank believed that a larger-than-expected tightening was needed to return inflation to its 1-3% target band. The effects of the cyclone were also seen as increasing the risks to inflationary expectations.
- Swap rates are 10-15bp higher after the decision.
- RBNZ dated OIS dated shunts firmer with pricing 22-24bp firmer across meetings.
Figure 1: RBNZ Dated OIS: Pre-RBNZ Vs. Post-RBNZ
Source: MNI – Market News / Bloomberg
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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