NZGBS: Cheaper, Global Bond Sell-Off Continued Led By Long-End

In early local trade, NZGBs are 4-6bp higher as the global bond market sell-off continued with the 10-year US tsy yield 10bp higher at 4.17%, the highest level since Nov’22. The 2/10 yield is steeper with the 2-year little changed. The yield curve has steepened for eight straight days taking it to -71bp from -105 at the start of last week.

• US economic releases were second tier, with ISM services PMI as the highlight. The headline index fell 1.2pts to 52.7, with falls in the employment index (to 50.7) and new orders (to 55.0), as well. The prices paid index rose 2.7pts to 56.8.
• The focus now turns to US Non-Farm Payrolls later today.
• Elsewhere, the BoE hiked 25bp (32bp was priced in prior to the decision), taking the bank rate to 5.25%, and marking a cumulative 515bp of hikes since the late 2021 trough. The market reaction to the decision was modest.
• Swap rates are 4-8bp higher.
• RBNZ-dated OIS pricing is slightly softer with terminal rate expectations at 5.65%.
• Today the local calendar is empty.
• In Australia, the Statement on Monetary Policy is due. The statement will provide a forecast update with the endpoint extended from June-25 to Dec-25.