NZGBS: Cash Curve Twist Steepens, Wages Growth Peaked But Remain Elevated

The 2-year NZGBs benchmark ended on a positive note, with its yield 1bp lower. The 10-year benchmark is however at session cheaps (3bp cheaper). Longer-dated NZGBs faced pressure due to the reversal of ACGBs' post-RBA rally and a retreat in US Tsys from the morning’s highs following Fitch's downgrade of the US to AA+.

• The 2s10s swap curve twist steepens with rates 3bp lower to 3bp higher.
• RBNZ dated OIS pricing closed 1-5bp softer across meetings, with mid’24 leading.
• The NZ Treasury in coordination with modelling from the RBNZ has decided to give the central bank more capital and an indemnity to allow it to increase its capacity for FX intervention if needed. See the report here.
• Private sector wages rose 1.1% q/q and 4.3% y/y with the public sector lower at 0.6% and 4.2%, which is driven by collective agreements. Significant moderation in wage growth is still needed before the RBNZ eases.
• Tomorrow the local calendar sees ANZ Commodity Prices. All main commodity prices remain under downward pressure.
• In Australia, Q2 Retail Sales Ex-Inflation data is due.
• Tomorrow the NZ Treasury announced that they plan to sell NZ$250mn of the 0.25% May-28 bond, NZ$175mn of the 4.25% May-34 bond and NZ$75mn of the 2.75% May-51 bond.