NZGBS: Cheaper After US Tsys Pare Friday’s Gains

In local morning trade, NZGBs are 2-3bps cheaper after US tsys finished weaker. Narrow ranges were in play from midmorning of the NY session. No obvious headline driver as US tsys scaled back a portion of Friday's rally amid cautious trade ahead of Fed Chairman Powell's policy testimony to Congress Wed-Thu and the Payrolls Report Friday.

• Atlanta Federal Reserve President Raphael Bostic said his base case remains for two rate cuts this year, likely starting in the third quarter, and does not anticipate reductions at back-to-back meetings, adding he would like quantitative tightening to continue at the current pace for as long as possible.
• Ongoing corporate bond issuance (over $21bn) generated some pressure via rate-lock hedging.
• Tuesday’s US data calendar includes S&P Final PMIs, ISM Services and Factory Orders.
• Swap rates are 2-4bps higher, with the 2s10s curve flatter.
• RBNZ dated OIS pricing is little changed across meetings. A cumulative 52bps of easing is priced by year-end.
• NZ Treasury published an Operating Deficit before gains and losses of NZ$3.66bn for the seven months ended Jan. 31.
• According to Barfoot & Thompson, which sells about a third of residential properties in Auckland, the average price rose 3% m/m to NZ$1,116,150 in February.