NZGBS: Cheaper With US Tsys, NZIER Survey Shows A Cooling In Price Pressures

In local morning trade, NZGBs are 3-5bps cheaper across benchmarks after another heavy NY session for US tsys.

• US rates were pressured early by EGBs as the French election risk premium was unwound with the far-right’s victory less decisive.
• US tsys finished with a bear-steepening despite a miss by ISM Mfg and Prices Paid. S&P PMI Mfg was also revised down fractionally in the final June release to leave a still modest increase to 51.6 (cons & prelim 51.7) after 51.3 in May.
• The NZIER Business Opinion Survey for Q2 showed a net 44% of businesses expect the economy to get worse, from 25% with that view in Q1. A net 28% of businesses reported a decline in their own trading activity in Q2, with a net 10% of businesses expecting their own activity to worsen in Q3. A net 23% of firms raised prices in Q2, vs 35% in Q1.
• Auckland's Average House Price gains 4.5% m/m (+12.1% y/y) in June on more top-end sales.
• Building Permits fell 1.7% m/m in May versus revised -2.1% in April.
• Swap rates are 3-5bps higher, with the 2s10s curve steeper.
• RBNZ dated OIS pricing is little changed. A cumulative 30bps of easing is priced by year-end.