NZGBS: Little Changed, After A Mid-Session Reversal Higher In US Yields

In local morning trade, NZGBs are flat to 2bps richer after US tsys finished mixed, well off the session’s best levels after mildly higher-than-expected ISM Services.

• Global investor risk aversion saw the US 2-year yield reach a low of 3.65%, before finishing at 3.92%, 4bps higher.
• There were large falls across global equity markets. The S&P, which was down more than 4% at one point managed to pare some of its losses but still ended down ~3%.
• In July, the Services Index showed 51.4 (cons 51.0), confirming a return above 50 after the lowest since early in the pandemic. Coupled with firmer underlying details, imminent recession concerns that appeared to have been priced in cooled.
• Looking ahead to today the US calendar will see Trade Balance data and a Tsy 3Y Note Sale. There is no scheduled Fed speak. Markets will also be watching for VP Harris Democratic nominee's choice of Vice President no later than Tuesday.
• Swap rates are flat to 2bps lower, with the 2s10s curve flatter.
• RBNZ dated OIS pricing is flat to 3bps firmer across meetings. A cumulative 101bps of easing is priced by year-end.
• Today, the local calendar is empty, but the RBA delivers its Policy Decision across the ditch.