NZGBs Cheaper, Curve Bear-Flattens, Bond Auction Well Received

NZGBs are 7-9bps cheaper and closed near session lows, with the curve bear-flattening. Earlier NZ FinMin Nicola Willis delivered her pre-budget speech where see said the current economic situation is “challenging for the government books” and there was a 5yr, 10yr & 20yr bond auction which saw decent interest.

• The US Tsys curve is slightly steeper today, yields are 1-2bps higher while the 2y10y is unchanged at -34,488. Tsys futures are trading at intraday lows with the 10y contract down ( - 04+) at 108-22, we still trade comfortably above initial support at 108-13+ (20-day EMA)
• The NZGB curve has bear-flattened the 2Y is +8.2bps at 4.81%, 10Y is +7bps at 4.722%.
• Swap rates are 1-4.5bps higher across the curve
• RBNZ dated OIS has softens 2-5bps out past august with a cumulative 36bps of easing is priced by year-end
• Earlier, we had the 5yr, 10yr & 20yr bond, most demand was in the 5yr & 10yr lines printing NZ$250m and NZ$225m respectively.
• Earlier, FinMin Willis addressed the economic challenges ahead in her pre-budget speech, emphasizing the need for fiscal responsibility and modest spending, mentioning the economic situation is “challenging for the government books”. She mentioned that budget wouldn't be big-spending, but that it would deliver tax relief for middle and lower-income workers. The budget will be delivered May 30th.
• Looking Ahead: BusinessNZ Manufacturing PMI on Friday