NZGBS: Little Changed, Hawkish Cut From ECB

In local morning trade, NZGBs are unchanged after US tsys finished little changed across benchmarks. US initial jobless claims rose 8k last week to 229k, but seasonal adjustments were seen as a factor. Attention now turns to Non-Farm Payrolls later today.

• European yields were slightly higher after the ECB’s “hawkish cut”. The ECB lowered its policy rate by 25bps to 3.75%. While the Governing Council noted progress in bringing down inflation it added “domestic price pressures remain strong as wage growth is elevated, and inflation is likely to stay above target well into next year.” Inflation forecasts were revised, with inflation not back to target until 2026.
• Regarding the policy outlook the ECB said it “will keep policy rates sufficiently restrictive for as long as necessary”. In the press conference, President Lagarde was non-committal on the timing of the next rate cut.
• 1Q Manufacturing Sales rose 0.7% q/q, while Volumes fell 0.4% q/q.
• Swap rates are little changed.
• RBNZ dated OIS pricing is little changed. A cumulative 25bps of easing is priced by year-end.