NZGBS: Little Changed, US Tsys Consolidate

NZGBs opened 1bp cheaper after US Tsys largely consolidated after three consecutive days of cheapening. After the bell, the US Tsy 2/10 cash curve had flattened with the 2-year little changed and the 10-year yield 2bp lower despite a raft of economic data and US earnings. Fed’s Bostic said there is “more work to be done” on policy but favoured just one more hike before leaving rates unchanged for some time. Fed fund pricing for a 25bp hike in May held steady at an 86% chance while June firmed to a cumulative 27.5bp at 5.10%.

• Swap rates are flat to 1bp higher with the 2s10s curve little changed.
• A subdued open for RBNZ dated OIS with pricing flat to 1bp firmer across meetings with 21bp of tightening priced for May.
• Overnight the global dairy trade auction index rose 3.2%, with whole milk powder prices up 1.0% to $3,089 per metric tonne.
• The local calendar is light ahead of Q1 CPI on Thursday. With the release earlier in the week of the final pieces in the CPI forecasting puzzle (March food and rental price data) BBG consensus is expecting a print of +1.5% Q/Q and 6.9% Y/Y after +1.4% and 7.2% in Q4.