NZGBS: At Bests, Outperforms $-Bloc

NZGBs ended the session on a high note, with the 2-year and 10-year benchmarks gaining 3bp and 2bp, respectively. Without meaningful domestic drivers, the local market followed the modest strengthening in US tsys in Asia-Pac trade. However, NZGBs performed better, with the NZ/US 10-year yield differential tightening by 3bp to +64bp.

• Meanwhile, the NZ/AU 10-year yield differential narrowed by 1bp to +69bp, marking close to the narrowest gap since mid-March when the NZ current account deficit significantly exceeded expectations. This is noteworthy because it has occurred despite the divergent paths of NZ and Australia's external and fiscal accounts, with the latter in a more favourable position.
• Swap rates closed 1-3bp lower with the 2s10s curve 2bp steeper.
• RBNZ dated OIS closed little changed across meetings with 25bp of tightening for the upcoming May 24 meeting.
• April Food Prices and REINZ House Prices are slated for tomorrow.
• Until then, all eyes will be on the US CPI for April later today.
• The NZ Treasury announced that they plan to sell NZ$200mn of the 0.25% 15 May 2028 bond, NZ$150mn of the 3.50% 14 April 2033 bond and NZ$50mn of the 2.75% 15 May 2051 bond tomorrow.