NZGBS: Closed Sharply Cheaper, Pressured By US Tsys & JGBs

NZGBs closed sharply cheaper, resulting in benchmark yields surging by 9bp. This downward trend was attributed to the local market being affected by the upward movement of global bond yields. Initially, despite the weakness observed in US tsys overnight, NZGBs commenced the day with only a slight cheapening. However, as weakness in US tsys persisted throughout the Asia-Pac session, NZGBs progressively weakened.

• A temporary pause in the selling occurred when ACGBs saw an uptick in response to unexpectedly weak employment data. Nonetheless, the selling pressure resumed after global bonds were negatively impacted by a subpar 20-year JGB auction.
• US tsys sit ~3bps cheaper across the major benchmarks in Asia-Pac trade.
• The situation was exacerbated by lacklustre demand witnessed at the weekly NZGB auction, where cover ratios ranged from 2.11x to 2.93x.
• Swap rates closed 9-12bp higher with the 2s10s curve steeper.
• RBNZ dated OIS pricing closed 2-6bp firmer across meetings.
• Tomorrow the local calendar is empty tomorrow.
• There is a thin docket in Europe today, further out we have US initial jobless claims and US Conf. Board leading index.