NZGBS: Cheaper, Tight Range, Budget on Thursday

NZGBs closed 3-4bp, near session cheaps, after trading in a relatively tight range. There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined announcement of the NZ$1 billion flood and cyclone recovery package. Accordingly, local participants appeared content to be on headlines and US tsys watch throughout today’s session.

• Swap rates closed 2-3bp higher with the 2s10s curve flatter, and the implied long-end swap spread tighter.
• RBNZ dated OIS closed 1-5bp firmer out to Feb’24 with 22bp of tightening priced for the upcoming May 24 meeting.
• The PSI index fell from a revised 53.8 in March to 49.8 in April. The current level is below the long-term average of 53.6 for the first time since December.
• The local calendar is light ahead of the Budget on Thursday.
• Before then, the local market is likely to eye the release of Australia's of the RBA Minutes for May tomorrow, Q1 Wage Price Index on Wednesday, and the April Employment Report on Thursday.
• Further afield, the global calendar is light ahead of tomorrow’s data dump in China, the Euro Area's Q1 GDP (2^nd estimate) and US Retail Sales.