BONDS: NZGBS: Slightly Cheaper, Subdued Session, Light Calendar Next Week

• China bond futures are less volatile today after yesterday’s losses.
• China’s 10YR future is down -0.05 to 108.55, whereas China’s 2YR future has regained ground up +0.008 to 102.672.
• The 10YR future was down to a low of 108.30 dropping -0.40 yesterday, before staging a comeback late in the day to finish at 108.6, a fall of -0.18.
• Today’s move sees the 10YR remain below the 50-day EMA of 108.62, with the 100-day EMA at 107.84.
• Having had several sessions where yields moved higher, today sees a stronger day for the CGB 10yr bond, down -1.5bps in yield at 1.70%.
• China’s 2YR future remains around the mid-point between the 100-day EMA of 102.74 and the 200-day EMA of 102.63.
• Economic data out today suggests that the improving trend in house prices stalled in January, likely due to the Lunar New Year Holiday.
• There are mixed fortunes for the key equity indices with the Hang Seng down -0.55%, whilst the CSI 300 is up +0.39%, Shanghai Comp +0.50% and Shenzhen Comp +1.17%.   

NZGBs closed 1-3bps cheaper, settling near the middle of today’s ranges after reversing gains from an earlier rally of 4-5bps following the RBNZ policy decision. The shift came after Governor Orr’s press conference tempered market sentiment.

• The RBNZ’s MPC cut the cash rate by 50bps to 3.75%, in line with unanimous forecasts, bringing total easing to 175bps.  
• Governor Orr noted that while underlying inflation remains above the target band, its expected decline will allow for further easing. The RBNZ anticipates additional 25bp cuts at both the April and May meetings, provided economic conditions evolve as projected.
• The MPC is not in a hurry to bring rates to around 3% as there are still some domestic inflation pressures, but they should dissipate.
• RBNZ Governor Adrian Orr will front a Finance & Expenditure Select Committee on MPS tomorrow at 0810 NZT.
• Swap rates closed 1-2bps higher.
• RBNZ dated OIS pricing closed little changed across meetings. 49bps of easing had been priced for today, with a cumulative 115bps by November 2025.
• Tomorrow, the NZ Treasury plans to sell NZ$250mn of the 4.50% Apr-27 bond, NZ$200mn of the 4.25% May-34 bond and NZ$50mn of the 1.75% May-41 bond.

Following today’s decision to cut the cash rate 50bp to 3.75%, MPC members will make a number of appearances. The schedule is below:

• Thursday, 20 February 2025 – Governor Orr interviewed by Radio NZ 0600-0900 NZDT
  - Governor Orr interviewed by Newstalk ZB 0730-0800 NZDT
  - Governor Orr interviewed by CNBC 1100-1130 NZDT
• Friday, 21 February 2025 - Assistant Governor Silk video interview for the national Business Review aired in the morning
• Monday, 10 March 2025 – Deputy Governor Hawkesby speaks at ANZ Investor Tour at 1430 NZDT on February Monetary Policy Statement (it won’t be livestreamed)
• Schedule can be found here.