NZ fiscal books looking dog-eared – TDS

According to analysts at TDS NZ FinMin Grant Robertson has delivered the promised string of fiscal surpluses, albeit lowered across the board to accommodate PM Ardern’s prolific spending.

Key Quotes

“The NZGB issuance program remains remarkably untouched, while the ‘postponed’ nominal 2029 is expected to be issued via syndication in H1 2018.”

“At 4.6% New Zealand already has low unemployment, and with inflation and inflation expectations already well anchored at 2%, the OCR does not need to remain on the floor at 1.75% for much longer. The softer housing market has already triggered relaxed LVR restrictions.”

“We do not favour medium- to longer-dated NZGBs ahead of inevitable issuance upgrades down the track, as well as so-far unpriced RBNZ tightening next year. Curve steepening is our preferred scenario over the coming six months, as well as NZD bullishness by mid-year.”