NZGBS: Richer After US Tsys Finish Stronger Despite Lower-Than-Expected Jobless Claims

In local morning trade, NZGBs are 1-3bp richer after US tsys reverse early weakness to finish 1-7bp richer with the curve steeper. Dec’23 10-year futures are back near Wednesday’s pre-ISM Services data highs.

• US tsys had sold off after Initial Jobless Claims came out lower than expected (216k, 234k est). Continuing Claims added to the healthier-than-expected data, falling to 1679k (cons 1719k) from a downward revised 1719k (initial 1725k). The data is now back below the 2019 average. Meanwhile, Unit Labor Costs printed higher than expected at +2.2% vs. +1.9% est, with Nonfarm Productivity near in-line at 3.5% vs. 3.4% est.
• Swap rates are flat to 3bp lower, with the 2s10s curve flatter.
• RBNZ dated OIS pricing is little changed.
• Investment in NZ has rebounded solidly following the pandemic. Surging dwelling investment and a strong public infrastructure program have been followed by a pickup in business investment. However, Bloomberg believes the outlook is likely to be a continuation of modest total factor productivity growth, at a pace of 0.5% per annum. A repeat of the rapid pace of productivity experienced through the late 1990s is unlikely. (See link)
• Today the local calendar is empty. The next release of significance will be Retail Card Spending for August on Tuesday.