NZGBS: Bear Steepening, Tracking Tsys, ECB Expected To Hold Policy Steady

NZGBs closed 1-8bps cheaper, with the 2/10 curve steeper. NZGBs traded in relatively narrow ranges during the local session after gapping cheaper at the open following US tsys' weak lead-in.

• In the realm of weekly supply, demand metrics were rather lacklustre, with cover ratios for the various lines falling in the range of 2.6 to 2.9 times.
• With the local data calendar light again today, local participants have likely taken their directional cues from US tsy dealings in the Asia-Pac session. Cash US tsys have twist-steepened, pivoting at the 10s, with yield movement bounded by +/-1.5bps.
• Swap rates closed 6-11bps higher, with the 2s10s curve steeper and implied swaps spreads wider.
• RBNZ dated OIS pricing closed slightly firmer across meetings, with terminal OCR expectations at 5.61%.
• Tomorrow, the local calendar sees ANZ Consumer Confidence.
• Later today, the ECB is widely expected to hold policy steady at 4%. Even though the Eurozone economy is at risk of a potential recession and facing a downside skew in terms of risks, the ECB is unlikely to waver and will likely reiterate the necessity of maintaining restrictive measures.
• Further out, we have US wholesale inventories, GDP, durable goods, initial jobless claims and pending home sales. There is also 7-year supply.