Prashant Newnaha, senior Asia-Pacific rates strategist at TD Securities, suggests that even though an Aug RBNZ cut is mostly priced in, they receive Aug RBNZ OIS at 1.31%, consistent with TD’s new revised RBNZ cash rate profile (Aug 1.25%, Nov 1%).

“After the RBNZ indicated that 'a lower OCR may be needed over time' in its statement last week (Wed), we got a downbeat print on ANZ's Business Outlook Survey (Fri) and this morning we received a very poor read on business confidence, with the NZIER's Quarterly Survey of Business Confidence plunging to its lowest levels in 10yrs.”

“The RBNZ highlighted 'subdued business sentiment' as dampening domestic spending in last week's statement, so in the wake of these prints, the odds of downgrades to the RBNZ's forecasts are now higher. Today's NZIER reports suggests annual GDP growth to be below 2% in H2'19 in contrast to current RBNZ MPS forecasts that have annual growth running at 2.5%/2.6% in H2'19.”