NZGBS: Cheaper, US Tsys Pressured By Supply & Stronger Than Expected PMIs

In local morning trade, NZGBs are 2bps cheaper after US tsy yields pushed 4-5bps higher across benchmarks ahead of Thursday's busy US calendar: GDP, PCE, Weekly Jobless Claims and Tsy Sec Yellen’s Outlook. US tsys were pressured by the combination of stronger-than-expected PMI data, an ugly 5-year auction and a heavy corporate supply calendar.

• S&P Global US PMIs for January: Mfg PMI (50.3 vs. 47.6 est, 47.9 prior); Services PMI (52.9 vs. 51.5 est, 51.4 prior); Composite PMI (52.3 vs. 51.0 est, 50.9 prior).
• Risk on sentiment also weighed, with the S&P 500 hitting a record high of 4903.68 before paring some of its advance. The NASDAQ advanced over 1% intraday, before finishing up 0.4%.
• Swap rates are 4bps higher.
• RBNZ dated OIS pricing is little changed. A cumulative 87bps of easing is priced by year-end compared to 92bps before yesterday’s Q4 CPI data release.
• NZ Treasury published financial statements for five months ended Nov. 30. The Operating Deficit before gains/losses was NZ$2.8bn, NZ$1.15b narrower than the NZ$3.94b gap projected in the half-year fiscal update. Net Debt was 20.9% of GDP vs 21.4% projection.
• Today, the NZ Treasury plans to sell NZ$250mn of the Apr-27 bond, NZ$175mn of the May-34 bond and NZ$75mn of the Apr-37 bond.