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NZGBS: Reverse Part Of Yesterday's Outperformance Vs. U.S.

BONDS

NZGBs retrace part of yesterday’s strength to open 4bp weaker after the U.S. Tsy 10-year yield hit its highest level since Nov 10 before reversing to be 1bp higher at the bell. The NZ/US cash 10-year yield differential is +3bp, unwinding much of yesterday’s narrowing.

  • The Treasury has announced the appointment of JLMs (ANZ, CBA, JPM & Westpac) for the syndication of the new 15 May 2030 NZGB, with expectations for the launch to take place next week, subject to market conditions.
  • Swap rates open 5-6bp higher, implying a slight widening in swap spreads, with the 3s10s curve 1bp steeper.
  • RBNZ dated OIS is unchanged across meetings after terminal rate pricing re-coiled yesterday from a level just shy of the RBNZ’s projected OCR peak of 5.50% to close at 5.43%. April meeting pricing is 2bp lower at 38bp of tightening.
  • On the local calendar, CoreLogic’s house price index printed -8.9% Y/Y, the steepest annual decline since 2009. January Building Permits recorded another M/M fall. Today’s data however pre-dates much of the recent severe weather.
  • Across the Tasman we will see Australia's Q4 GDP and monthly CPI print.

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