NZGBS: Richer After US Tsys Rally On The Back Of A Weak ISM

In local morning trade, NZGBs are 2-3bps richer after US tsys rallied sharply following weak ISM data on Friday. ISM Mfg printed 47.8 vs. 49.5 est, with Prices Paid at 52.5 vs. 53.2 est and New Orders at 49.2 vs. 52.7 est. The US 2-year yield declined 9bps to 4.53% and the 10-year slide 7bps to 4.18%. Those were the lowest yields since February 12 (closing basis).

• The UofM’s Consumer Sentiment Index was also supportive for US tsys. It saw an unexpected fall to 76.9 from 79.6 in January. Long-run inflation expectations remained stable at 2.9% for the third straight month.
• Balanced commentary from several Fed speakers and the preview of Chairman Powell's monetary policy report to Congress this week did little to forestall the drop in tsy yields on Friday.
• US data resumes on Tuesday with S&P Global US Services PMI, ISM Services, Factory and Durable Goods Orders.
• Swap rates are 1bp lower.
• RBNZ dated OIS pricing is little changed. A cumulative 53bps of easing is priced by year-end.
• Terms of trade fell 7.8% q/q (-0.1% est) in 4Q. Export volumes rose 2.6% q/q versus revised -5.4% in 3Q, while Import volumes fell 7.0% q/q versus revised -3.5% in 3Q.