BONDS: NZGB Curve Steepens, Business Confidence Rises
Feb-27 03:52
NZGBs closed mostly cheaper, the short-end outperforming as the curve bear-steepens. NZ Treasury sold NZ$225m 2029, NZ$225m 2033, NZ$30m 35 (linkers) & NZ$50m 2041 bonds today, while NZ business confidence increases in Feb.
- Today’s weakness appears tied to cash US tsys, which are 1-2bps cheaper in today’s Asia-Pac session after yesterday’s gains.
- NZGBs closed -1.4bps to +1.8bps. Short end outperformed today, with the 2yr -1.4bps at 3.644%, while the 10yr closed +1.4bps at 4.490%. The 5s10s closed +1.1bps at 38.50
- Nevertheless, NZGBs have underperformed US tsys recently, although the NZ-US 10-year yield differential is little changed from yesterday.
- Swap rates are mixed closing +/- 1bps
- RBNZ-dated OIS pricing was steady today. Currently, 26bps of easing is priced for April, with a total of 65bps expected by November 2025.
- New Zealand business confidence increased in February 2025 to 58.4 from 54.4 in January, supported by lower interest rates. While past activity weakened to -2.9 from 0.2, it remained better than six months prior, and export and investment intentions rose to 17.9 and 18.1, respectively, led by agriculture. Profit expectations dipped slightly to 22.3, with agriculture most optimistic, and inflation expectations softened to 2.5% from 2.7%.
- RBNZ reported January new residential mortgage lending at NZ$5.1b, up 50% YoY but down 11% MoM seasonally adjusted. First-home buyers accounted for NZ$1.04b (20.2%), rising 26% YoY, while investors borrowed NZ$1.15b (22.5%), surging 90% YoY. The number of new mortgage commitments rose 37% YoY to 14,122.
- Tomorrow we have ANZ Consumer Confidence, and Filled jobs
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BONDS: NZGBS: Richer But Well Off Bests, Fin Min In Parliament Tomorrow
Jan-28 03:46
NZGBs closed 3-6bps richer, with a flatter 2/10 curve, but well off session bests. The local market was 7-8bps richer early after yesterday’s strong lead-in for US tsys. Cash US tsys are ~2bps cheaper in today’s Asia-Pac session.
- NZGBs slightly outperformed their $-bloc counterparts, with the NZ-US and NZ-AU 10-year yield differentials narrowing by 1-2bps. The NZ-US 10-year yield differential, now at -7bps, is edging closer to the cyclical low of -15bps recorded in December 2022—the lowest since late 2020.
- Swap rates closed 2-3bps lower.
- RBNZ dated OIS pricing closed 1-4bps softer across meetings, with late 2025 leading. 48bps of easing is priced for February, with a cumulative 113bps by November 2025.
- Tomorrow, Finance Min Willis speaks to the Select Committee on the Budget Policy Statement and Half-Year Economic and Fiscal Update. RBNZ Chief Economist Paul Conway will also present a speech titled: Beyond the Cycle: Growth and interest rates in the long run.
- On Thursday, the NZ Treasury plans to sell NZ$200mn of the 1.50% May-31 bond, NZ$200mn of the 4.25% May-36 bond and NZ$100mn of the 1.75% May-41 bond.
EQUITIES: HK Equities Slightly Higher, Chinese Semiconductor Stocks Struggle
Jan-28 03:35
BOJ: Japan Government Nominates Junko Koeda To BoJ Board
Jan-28 03:30
Per BBG headlines, the Japan Government has nominated Junko Koeda to the BoJ board. She will replace Seiji Adachi.
- Per the new board member's website from Waseda Univsersity: "Ms. Junko Koeda previously held positions as a chief economist at the Ministry of Finance of Japan, an assistant professor at the University of Tokyo, and a staff economist at the International Monetary Fund. She has a Ph.D. degree in economics from UCLA and a bachelor’s degree from the University of Tokyo." (See this link for more details).
