NZGBS: Cheaper With US Tsys, Heavy Corporate Issuance, RBA Policy Decision Due

In local morning trade, NZGBs are 3bps cheaper after US tsys started the week on the back foot amid a hefty corporate calendar. Monday's move partially reversed recent gains that saw yields hit multi-month lows. An easing in French political uncertainty over the weekend also weighed.

• US rates broke through their early trading range amid word Home Depot would issue corporate debt over 9 tranches. Speculative selling added to rate lock hedging well before the $10bn 9pt launched, a lion's share of just over $20bn total issuance on the day.
• The June Empire State index improved but the headline remained in contractionary territory.
• The cash US tsy curve bear-flattened, with yields 5-7bps higher.
• Swap rates are 3-4bps higher.
• RBNZ dated OIS pricing is slightly firmer for 2025 meetings. A cumulative 29bps of easing is priced by year-end.
• Q2 Westpac Consumer Confidence Index dropped to 82.2 from 93.2 in Q1.
• Today, the Australian calendar will see the RBA Policy Decision. The RBA is expected to keep its key interest rate at 4.35% for the fifth consecutive meeting to manage persistent inflation, despite a slowing economy and tight labour market. RBA Governor Bullock is likely to maintain a mildly hawkish stance. (see MNI RBA Preview here)