NZGBS: 10Y Yield Hits Highest Level Since 2011, 2/10 Cash Curve Flattest Since 2009

NZGBs closed sharply cheaper with benchmark yields 13-18bp higher. NZGBs did however manage to move away from the cheapest levels of the day. Nonetheless, the 10-year benchmark yield reached its highest level since 2011 at 4.87%. Additionally, the 2/10 cash curve inverted to a new cycle low of -76bp, the flattest since 2009.

• Without domestic catalysts, the local market has been guided by US tsys in Asia-Pac trade and ACGBs. Cash US tsys have extended the cheapening witnessed in NY trade with yields flat to 2.5bp higher. ACGBs sit 12bp cheaper on the day.
• NZ 2s10s swap curve sits around 20-year lows at -92bp with the 2-year and 10-year rates 16bp higher ahead of US Non-Farm Payrolls later today.
• RBNZ dated OIS pricing closed flat to 5bp firmer across meetings. A 14% chance of a 25bp hike is priced for next week’s RBNZ policy meeting.
• PM Hipkins will sign a free trade agreement with the European Union next week that will deliver more savings for exporters than other South Pacific arrangements. (See link)
• Next week the local calendar sees REINZ House Prices and Net Migration ahead of the RBNZ Decision on Wednesday. BBG consensus is unanimous in expecting a no-change outcome. Retail Card Spending has been delayed until July 13.