NZGBS: Little Changed, Strong 20Y Tsy Auction, Trade Balance Data Due

NZGBs are little changed in early local trading. US tsy yields moved higher after higher-than-expected UK inflation data but recovered following a successful 20-year bond auction. The auction resulted in a yield that traded 1.8bp below the WI yield and featured a record-high bid/cover ratio of 2.87x, surpassing the previous month's ratio of 2.56x.

• The broader reaction in the tsy market to Fed Chair Powell's comments during his testimony before the House Financial Services Committee was relatively subdued, as he reiterated expectations of higher rates to address inflationary pressures.
• Swap rates are 1-3bp lower with the implied swap spreads tighter.
• RBNZ dated OIS pricing is flat to 4bp firmer for meetings out to Feb’24.
• According to CoreLogic data, NZ house sales rose from a year earlier for the first time in two years, adding to signs the nation’s property market is finding a floor. (See link)
• The local calendar is slated to release May trade balance data today. The underlying balance is slowly improving as imports soften.
• The NZ Treasury plans to sell NZ$200mn of the 4.50% 15 May 2030 bond, NZ$150mn of the 3.50% 14 April 2033 bond and NZ$50mn of the 2.75% 15 April 2037 bond today.