NZGBS: Closed On A Strong Note, US Q1 Productivity Later Today

NZGBs closed on a strong note, with yields 5-6bps lower. With the local calendar relatively light, today’s move can be linked to US tsys' reaction to a less hawkish-than-expected FOMC statement. While gains were pared into yesterday’s close, cash US tsys are 1-2bps richer in today’s Asia-Pac session.

• Today’s weekly supply showed solid demand metrics, with cover of 2.5-3.0x.
• The focus now turns to Friday’s US Non-Farm Payrolls release.
• Overnight, labour market data gave mixed signals. JOLTs data showed further signs of easing labour market pressures. The number of job openings dropped to a three-year low and the quits rate fell to the lowest since August 2020. However, US private payrolls increased more than expected in April while data for the prior month was revised higher.
• Swap rates closed 5-6bps lower.
• RBNZ dated OIS pricing closed 1-6bps softer across meetings. A cumulative 39bps of easing is priced by year-end.
• The local calendar is empty tomorrow.
• Later today the US calendar will see the preliminary release for Q1 productivity. This will provide broader macro considerations of Tuesday’s higher-than-expected ECI. Strong productivity gains have offset labour costs in recent quarters but consensus sees productivity growth tailing off to 0.7% annualized in Q1.