NZGBS: Cheaper, US Tsys Pressured By Corporate Issuance

NZGBs opened 5bp cheaper after US tsys came under deal-tied hedging pressure from heavier-than-expected corporate issuance in NY trade ahead of tomorrow’s US CPI release. After the bell yields were 7-9bp higher with the 2-year trade at 4.0% and the 10-year rate at 3.5%. There was a further paring of rate cut expectations for the second half of the year.

• Swap rates opened 6bp higher with implied swap spreads wider.
• RBNZ dated OIS opened mixed, with meetings out to August flat to 1bp softer, and those beyond 1-3bp firmer. Currently, the market has priced in 25bp of tightening for the upcoming May 24 meeting.
• Retail Card Spending for April is due for release with modest gains expected. The current high inflation environment, weather-related disruptions, and a rise in fuel prices are all likely to have contributed to the result.
• In Australia, Treasurer Chalmers is slated to hand down the Federal Budget tonight. If it turns out to be significantly expansionary, then RBA rate expectations may be affected.
• Further afield, China's trade data is expected to reveal weaker export growth, following the unexpected strength in March. This can be attributed to the ongoing deterioration of external demand, as China's major export markets experience a slowdown.