NZGBS: Richer As Post-FOMC Rally In US Tsys Extends

In local morning trade, NZGBs are 5bps richer after the risk-on tone continued to gain momentum late Thursday. US tsys moved back to mid-April levels, with the curve bull steepening, in the aftermath of Wednesday's steady FOMC dovish (at least not hawkish) hold.

• US tsys shrugged off this morning's higher-than-expected Unit Labor Costs (4.7% vs. 4.0% est, prior down-revised to 0.0% from 0.4%) and Nonfarm Productivity miss (0.3% vs. 0.5% est, prior up-revised to 3.5%).
• Meanwhile, Initial Jobless Claims printed slightly lower than expected (208k vs. 211k est, 207k prior up-revised to 208k) and Continuing Claims (1.774M vs. 1.790M est, 1.781M prior down-revised to 1.774M). Trade Balance (-$69.4B vs. -$69.7B est).
• Swap rates are 4-5bps lower.
• RBNZ dated OIS pricing is 3bps softer for meetings beyond October. A cumulative 42bps of easing is priced by year-end.
• Today, the local calendar is empty.
• (Bloomberg) NZ Treasury Department published a paper titled “The productivity slowdown: implications for the Treasury’s forecasts and projections”, which found that “There appears to be no one factor driving New Zealand’s productivity slowdown, but a range of drivers contributing to the trend”. (See link)