Transpower and Spark add to local bond activity. Offshore markets refuse to get drawn into inflammatory geopolitical headlines

By Kymberly Martin

NZ swaps closed little changed yesterday while NZ bond yields closed up 1-2 bps.

Overnight, US yields largely traded sideways ahead of today’s US Thanksgiving holiday.

It was another relatively quiet day in the NZ rates market in the absence of key domestic data releases. The market continues to price around a 50% chance of an RBNZ rate cut at its 10 December meeting and around a 2.40% trough in the OCR by mid next year. Our central case remains a cut in December to a cyclical trough of 2.50%.

The NZ credit market has been a bit more active.

Transpower NZ released details of a (up to) NZD125 mln tap of its retail 2022 bond. This new issue, plus the recent Spark 7-year bond announcement, have helped to re-price NZ credit spreads wider. In general however, NZ spreads remain fairly tight compared to offshore counterparts.

Overnight, markets remained relatively calm in the absence of further inflammatory geopolitical headlines. US data delivery was sufficiently close to expectation so as not to cause much response, in a market seemingly already winding down for the Thanksgiving long weekend. US 10-year yields traded between 2.22% and 2.25%.

Today, the NZ trade balance will be released. Across the Tasman, Q3 private capex data will likely steal the limelight. Otherwise it looks to be a very quiet night on the scheduled data front.


Kymberly Martin is on the BNZ Research team. All its research is available here.

Daily swap rates

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