BONDS: NZGBS: Closed On A Strong Note After Q3 Infl Expns Stable

NZGBs closed near session bests, 2-3bps richer, after the release of RBNZ inflation expectations data.

• Q3 inflation expectations were stable in the RBNZ’s survey of forecasters, economists and industry leaders. 1-year ahead they remained at 2.4%, while 2-years ahead at 2.3% - both within the 1-3% target band but remaining above the mid-point. 1-year troughed at 2.1% in Q4 2024 while 2-year in Q3 2024 at 2.0%. With expectations stable, its measure of core moderating 0.1pp to 2.8% in Q2, wage inflation heading towards 2% and economic growth remaining lacklustre, the RBNZ seems likely to cut rates 25bp to 3% on August 20.
• Today’s weekly supply saw strong demand metrics, with cover ratios ranging from 3.13x (May-35) to 6.66x (May-41).
• Cash US tsys are 1bp cheaper to 1bp richer, with a slight steepening bias, in today's Asia-Pac session after yesterday's modest twist-steepener.
• Swap rates closed 1-2bps lower, with a slightly steeper 2s10s curve.
• RBNZ dated OIS pricing closed little changed across meetings. 23bps of easing is priced for August, with a cumulative 41bps by November 2025.
• Tomorrow, the local calendar will be empty. The next release will be Card Spending data on Wednesday.