NZGBs A Little Flatter, Off Best Levels

NZGBs moved away from best levels as ACGBs and U.S. Tsys traded a little softer during Thursday’s Asia-Pac session, leaving the major benchmarks 1-3bp richer on the day come the bell, with some light bull flattening in play.

• NZGBs did regain some poise, moving away from worst levels, even with payside flow evident in swaps, which resulted in swap spread widening on the session.
• The latest round of NZGB supply (consisting of Apr-25, May-32 & May-41) saw firmer demand for the longer-dated paper on offer (cover ratios of 1.68x, 2.11x and 2.78x), which aided the flattening dynamic. Lower cover for the shorter-dated paper on offer was perhaps a function of uncertainty re: monetary policy and ongoing market vol.
• RBNZ dated OIS continues to price a terminal OCR of ~4.90%, little changed on the day.
• Friday’s domestic docket will be headlined by m’fing PMI data, although catch up to core FI market gyrations in lieu of the impending the U.S. CPI print will probably provide more market impact during the early rounds of Friday dealing.