HOT TOPICS:   2015 series  |  Double shots  | Top 10 at 10                                                  RESOURCES:    Economic calendar   |   Rent or buy

The comment stream

Recent comments

Reader poll

United States
40% (53 votes)
None of them. They are more likely to decline.
20% (27 votes)
New Zealand
16% (21 votes)
China
11% (15 votes)
Australia
8% (11 votes)
Japan
5% (6 votes)
Total voters: 133

Which country's economy is likely to improve the most in 2015?

Older polls

Expection is for strong demand for LGFA bonds; anticipation of increased offshore investor participation in 2014

Posted in Bonds

By Kymberly Martin

It was another relatively lacklustre day in NZ swap markets, with yields closing up 1-2bps. Overnight, US 10-year yields subsided a little further to 2.81%.

As we head into Thursday’s RBNZ meeting we continue to believe the market is a little ahead of itself in pricing an almost a 40% chance of a rate hike by January. We do not expect the RBNZ’s Monetary Policy Statement to justify this pricing though we do expect a first hike mid-H1.

NZ 2 and 5-year swap yields closed at 3.73% and 4.58% respectively. The 2-10s curve remains around 146bps steep.

Today, the LGFA will tender NZ$105m of LGFA21s, along with $NZ35m of LGFA17s and $NZ10m of LGFA15s. We anticipate solid demand heading into the holiday season, though the large volume of the long-dated maturity may be a little more difficult for the market to absorb.

Ultimately, the key theme for LGFA bonds next year will be increased offshore participation. It is currently estimated only around 7% of the issuer’s bonds are held by non-residents.

Overnight, US 10-year yields subsided to 2.81%, in the backdrop of slightly soggy equity markets, but limited US data releases.

Today, the RBNZ’s weekly mortgage approvals data will be released. These have taken on greater importance since the introduction of LVR restrictions at the start of October.

Otherwise there is little scheduled on the domestic agenda ahead of tomorrow morning’s RBNZ meeting. Tonight, US mortgage applications will be released.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment in the box on the right or click on the "'Register" link at the bottom of the comments.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current Comment policy is here.