Parallel Cheapening Shift Along NZGB Curve

A cheaper bias across the core global fixed income space on Tuesday has shifted NZ yields higher in early Wednesday trade, although the move on NZGBs has been a little more limited than what was seen in the likes of U.S. Tsys, EGBs and Gilts.

• Yields are 5-6bp higher across the curve in what has been a relatively parallel shift.
• Participants continue to assess the terminal rate of the RBNZ’s hiking cycle, with RBNZ dated OIS now indicating a 4.50% peak on spill over from the recent rounds of repricing re: market expectations of the Fed’s terminal rate and ANZ upping their terminal rate call to 4.75% in the second half of last week (the most hawkish call we have seen).
• The above factors have maintained a flattening bias on the NZ yield curve in recent days.
• A reminder that the RBNZ’s terminal rate expectations currently sit at 4.10%, based on its Aug OCR track.
• Credit card spending data headlines the domestic docket on Wednesday, with the NZ economy already viewed as being fairly late cycle in nature.