NZGBS: Cheaper, US Tsys Weaker Ahead of Weekend

NZGBs opened 5bp weaker after US Tsy cheapened in NY trade ahead of the weekend as retail sales ex-autos & gas and the control group both beat expectations and large bank earnings exceeded expectations. Industrial production also came in stronger than expected. While most of the move higher in yields came early in the session, hawkish comments from the Fed’s Waller and a surprise jump in near-term U. Michigan inflation expectations added additional pressure. After the bell, US Tsy 2-year and 10-year yields were respectively 13bp and 7bp higher.

• Swap rates are 5-6bp higher across the curve.
• A subdued open for RBNZ dated OIS with pricing flat to 3bp firmer across meetings. 20bp of tightening is priced for May.
• The local data docket sees March PSI and Food Prices released soon (2330 and 2345 BST). The Performance Services Index has remained robust, but headwinds are mounting. Food prices are set to increase as recent severe weather impacts fruit and vegetable production.
• The highlight of the local calendar this week however will be Q1 CPI on Thursday.
• The calendar is light in Australia with the RBA Minutes for April (tomorrow) as the highlight.