NZGBS: Little Changed, US Tsys Slightly Richer Ahead Of Heavy Bill Issuance

NZGBs are 2bp cheaper in early trade, following a quiet overnight session characterised by minimal market fluctuations. After the NY bell, the US tsy curve has twist flattened with yields 1.3bp higher to 3.9bp lower. This movement occurred ahead of substantial T-bill auctions scheduled for this week, as the US Treasury aims to replenish its funds, given the recent suspension of the debt ceiling.

• The 2s10s swap curve flattens with rates flat to 2bp higher and implied swap spreads wider.
• RBNZ dated OIS is flat to 4bp firmer across meetings with Feb’24 leading. Terminal OCR expectations sit at 5.63%.
• At the latest GDT Auction Whole Milk Powder Price fell 3.0% to $3,173/MT.
• The local calendar is light today ahead of Mfg Activity (Q1) and the NZ Government’s 10-month Financial Statement tomorrow.
• In Australia, RBA Governor Lowe will give a speech at 0020 BST with the market expecting more insight into RBA thinking after yesterday’s surprise 25bp rate hike. Q1 GDP is also scheduled for release.
• The global economic calendar is light today, with the highlight being the BoC Policy Decision. The market has assigned a 46% probability of a 25bp rate hike. A hike would mark a notable shift in direction, considering it has left rates unchanged at the past two meetings.