NZGBS: Closed At Best Levels, Narrow Range, Local Calendar Light Until Tuesday

NZGBs closed near the session’s best levels, with benchmark yields 1bp lower. However, the local session range was narrow. With the domestic drivers light on the ground, local participants have likely been guided by US tsys in the Asia-Pac session. US tsys are currently 1bp lower to 1bp higher across benchmarks, with the curve steeper.

• That said, solid demand seen at the weekly NZGB auction, particularly for the longer-dated lines (cover ratios of 4.045x for the May-32 bond and 3.15x for the Apr-37 bond) likely assisted the local market’s bid tone.
• The swap curve has twist flattened, with rates 1bp higher to 2bp lower.
• RBNZ dated OIS pricing is little changed for meeting out to May’24 and 3-4bp firmer beyond.
• Manufacturing volumes rose 2.9% q/q in Q2 versus a revised -1.8% in Q1. Manufacturing sales rose 0.2% q/q versus a revised -2.5% in Q1.
• Tomorrow the local calendar is empty. The next release of significance will be Retail Card Spending for August on Tuesday.
• US jobless claims will be looked at later today for signs of the heat coming out of the labour market. A few FOMC speakers are on the wires including Williams, Goolsbee, Harker, Logan and Bostic.