NZGBS: Closed Near Session Cheaps, Slightly Outperformed $-Bloc

NZGBs closed at or near local session cheaps, with benchmark yields 6-9bps higher. With the domestic calendar light until ANZ Business Confidence on Thursday, local participants have likely eyed US tsys in Asia-Pac dealings for guidance.

• US tsys have observed narrow ranges in recent dealing and are holding cheaper in Asia today. Little meaningful macro newsflow has crossed. TYZ3 sits a touch above support of 108-00, dealing at 108-03+, -0-02. Cash tsys sit ~2bps cheaper across the curve, with the 10-year yield having made a fresh cycle high of 4.5620%.
• The NZGB 10-year has slightly outperformed its $-bloc counterparts, with the NZ-US and NZ-AU 10-year yield differentials 1bp tighter at 67bps and 81bps respectively.
• Swap rates are 3-10bps higher, with the 2s10s curve steeper.
• RBNZ dated OIS pricing is little changed across meetings, with terminal OCR expectations at 5.76%.
• The NZ economy has shown resilience to rising interest rates, past falls in house prices and intense cost-of-living pressures, the Treasury Dept. said in its Fortnightly Economic Update published Tuesday. “Nonetheless, growth has slowed and these headwinds, in addition to recent falls in commodity export prices, mean that growth will remain subdued for some time and provide room for inflation to continue to track down” (See link)