NZGBS: Closed On A Negative Tone, Global Bond Watch After Yesterday’s Sell-Off

NZGBs ended the session on a negative tone, experiencing an increase of 3-4bp in benchmark yields with the 2/10 curve flatter. In the absence of significant local catalysts, market participants were likely watching headlines and closely monitoring US tsys following the sell-off in global bonds triggered by central bank actions yesterday.

• Cash tsy yields are trading 1.2bp to 1.9bp lower across major benchmarks in Asia-Pac trade with the 5-year outperforming.
• Swap rates are 3-5bp higher with implied swap spreads little changed.
• RBNZ dated OIS pricing is 1-6bp firmer across meetings with May’24 leading.
• NZ is to begin weekly Treasury bill tenders from July 1.
• Japan’s sovereign debt is emerging as the most appealing outside the US. NZGBs sit above UK Gilts but below ACGBs. That’s the finding of a Bloomberg analysis of 24 government bond markets globally based on 10-year yields, currency-hedge costs and volatility. (See link)
• The local calendar is light next week with ANZ Business (Thu) and Consumer Confidence (Fri) as the highlights.
• The remainder of today’s session is relatively thin in terms of data releases with flash PMIs for the UK, Germany, the Eurozone, and the US as the highlights. UK retail sales are also out.