NZGBS: Cheaper, US Tsy Yields Higher After Stronger Than Expected Retail Sales

In local morning trade, NZGBs are 3bps cheaper, outperforming US tsys. US yields made fresh YTD highs following stronger than expected Retail Sales. US Tsy weakness was however pared into the close, with the 2-year yield finishing at 4.92%, up 2bps, and the 10-year yield rising to 4.60%, up 8bps.

• Ex-Auto Retail Sales rose 1.0% compared to 0.3% est, and February was revised 0.2pp higher to 0.5%. The control group, which feeds into GDP, was even stronger at 1.1% m/m. The data suggest that consumer spending was stronger than realised in Q1 and that there is solid momentum into Q2.
• Global bonds, however, remain sensitive to Middle East tensions, bouncing off lows late NY morning after a headline from Axios that Israel has "no choice but to retaliate against Iran.
• Swap rates are 4-6bps higher, with the 2s10s steeper.
• RBNZ dated OIS pricing is little changed. A cumulative 40bps of easing is priced by year-end.
• March REINZ Home Sales rose 8% y/y.
• (Bloomberg) Inflation-adjusted New Zealand existing home sales average price NSA fell 1.4% in March from the same period last year, according to Bloomberg calculations using official data. Real house prices recorded the 23rd consecutive monthly loss.
• The local calendar sees Q1 CPI tomorrow.