NZGBS: Weakness Extends After Treasury Comments

The front end of the NZGB curve has led a continued round of cheapening that has come in lieu of the previously outlined round of comments from the NZ Treasury re: the RBNZ, with benchmark NZGBs now siting 6-10bp cheaper as the curve bear flattens. Swaps rates are 5-9bp higher across the curve, also flattening, leaving swap spreads little changed to a touch tighter on the day. Terminal OCR pricing now sits just below 5.40% on the RBNZ-dated OIS strip, the best part of 10bp firmer on the day after the Treasury pointed to the potential for higher for longer rates at the central bank owing to the expected cyclone repair spending.