NZGBS: Cheaper, US Yields Higher, Mixed Fedspeak, Heavy Corporate Issuance

In local morning trade, NZGBs are 2-3bp cheaper after US tsy yields finish 8bp higher across the curve. Better-than-expected July Factory orders (-2.1% m/m versus -2.5% expected) and nearly $37bn of high-grade corporate issuance weighed on the market.

• Early dovish headlines from Fed Gov Waller, that last week's data "allows the Fed to proceed carefully .. no need to do anything imminently", saw yields hit a session low.
• Support evaporated after Cleveland Fed Mester said "The latest indicators suggest that demand is somewhat stronger than expected, that the momentum in the economy is greater than thought," she said. "I can well imagine, from what I see so far, that we might have to go a bit higher, that we might have to raise the policy rate a bit more."
• AFR reports that Goldman Sachs’ economists have cut their estimated 12-month US recession probability further to 15 per cent, or five percentage points lower than the firm’s prior estimate. “Our estimate is far below the Bloomberg consensus, which remains stuck at 60 per cent.”
• Swap rates are 3-4bp higher.
• RBNZ dated OIS pricing is flat to 1bp firmer across meetings.
• Today the local calendar sees Volume of All Buildings for Q2, with the residential downturn continuing.