NZGBS: Richer As Global Bonds Rally After Weaker EU & US PMIs

In local morning trade, NZGBs are 6-8bp richer after global bonds surged following US and European PMI data that pointed to a greater-than-expected slowdown in economic activity.

• Eurozone Mfg & Services PMIs remained sub-par, 43.7 and 48.3 respectively, with the German Composite PMI (44.7) down to the lowest level in 3 years.
• US tsys matched the moves in EGBs early then extended the rally after US PMIs came out lower than estimated: S&P Global US Manufacturing PMI (47.0 vs 49.0 est), Services (51.0, vs 52.2 est) and Composite (50.4 vs 51.5 est).
• US tsys finished 8-13bp richer, with the curve flatter.
• FOMC dated OIS has a terminal rate of ~5.40%, with ~70bps of cuts priced to July 2024.
• Swap rates are 9-12bp lower, with the 2s10s curve flatter and implied swap spreads narrower.
• RBNZ dated OIS pricing is 1-6bp softer across meetings, with Aug’24 leading. Terminal OCR expectations soften 3bp to 5.64%.
• The local calendar is empty for the rest of the week.
• Today the NZ Treasury plans to sell NZ$250mn of the 4.5% Apr-27 bond, NZ$150mn of the 2.0% May-32 bond and NZ$100mn of the 2.75% May-51 bond.