NZGBS: Little Changed, Typical NY Summer Session

In local morning trade, NZGBs are slightly cheaper after an uneventful summer trading session, with little newsflow to drive markets. US tsys finished with yields slightly lower but off their earlier lows.

• The front end outperformed after cooler existing home sales and strong demand at the 2-year note auction. Primary dealers were allocated a record low as investor demand soared, with the bid-to-cover ratio at 2.81, the highest in roughly a year.
• US existing home sales were weaker than expected, down 5.4% m/m in June, the fourth successive monthly decline.
• The 2-year US tsy was 3bps richer at 4.49%, with the 10-year unchanged at 4.25%. The curve steepened to -24bps from -27bps.
• Later today the US calendar will see Wholesale/Retail Inventories, Flash PMIs and New Home Sales data alongside $30bn 2-year FRN Note and $70bn 5-year Note supply.
• The BoC meets today with a 25bp cut to 4.5% widely, although not universally, expected.
• Swap rates are flat to 1bp higher.
• RBNZ dated OIS pricing is slightly softer across meetings. A cumulative 68bps of easing is priced by year-end.
• Today, the local calendar is empty.
• Tomorrow, the NZ Treasury plans to sell NZ$300mn of the 3.0% Apr-29 bond and NZ$200mn of the 4.50% May-35 bond.