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NZGBS: Cheaper With US Tsys, US Q1 GDP Prints Weaker Growth & Higher Inflation Than Expected

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In local morning trade, NZGBs are 4-6bps cheaper, after yesterday’s ANZAC day holiday.

  • This comes after the US GDP report for Q1 showed weaker growth and higher inflation than expected. US tsys focused on the latter.
  • US GDP rose by an annualised 1.6%, below the 2.5% consensus, partially explained by a shortfall in private consumption (2.5% against 3.0% expected). The core PCE deflator was stronger than expected, running at an annualised 3.7% (3.4% expected).
  • US rate cut expectations saw a further paring, sending 2- and 10-year yields 6-7bps higher.
  • Weekly claims were also lower than expected.
  • The OIS market now has only 34bps of easing priced by the end of 2024.
  • Swap rates are 6-7bps higher.
  • RBNZ dated OIS pricing is 2-6bps firmer across meetings, with October leading. A cumulative 48bps of easing is priced by year-end.
  • Consumer Confidence fell to 82.1 in April from 86.4 in March, according to ANZ Bank.
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In local morning trade, NZGBs are 4-6bps cheaper, after yesterday’s ANZAC day holiday.

  • This comes after the US GDP report for Q1 showed weaker growth and higher inflation than expected. US tsys focused on the latter.
  • US GDP rose by an annualised 1.6%, below the 2.5% consensus, partially explained by a shortfall in private consumption (2.5% against 3.0% expected). The core PCE deflator was stronger than expected, running at an annualised 3.7% (3.4% expected).
  • US rate cut expectations saw a further paring, sending 2- and 10-year yields 6-7bps higher.
  • Weekly claims were also lower than expected.
  • The OIS market now has only 34bps of easing priced by the end of 2024.
  • Swap rates are 6-7bps higher.
  • RBNZ dated OIS pricing is 2-6bps firmer across meetings, with October leading. A cumulative 48bps of easing is priced by year-end.
  • Consumer Confidence fell to 82.1 in April from 86.4 in March, according to ANZ Bank.