NZGBS: Richer But Subdued Trading Ahead Of US Payrolls Later Today

NZGBs closed 4-6bps richer and near the session’s best levels. With the domestic calendar light, today was a typical subdued pre-US payroll session. After the early richening induced by the US tsys’ extension of its post-FOMC rally, ranges were relatively narrow.

• Bloomberg consensus sees nonfarm payrolls growth of 241k in April after another strong 303k in March. Markets will be mindful of household survey volatility but with continued focus on immigration-driven supply-side strength, the u/e rate should help guide on broader labour market balance. At 3.83% in March, it doesn’t take much to move closer to the FOMC’s 4.0% end-2024 forecast.
• Swap rates are 4-6bps lower.
• RBNZ dated OIS pricing is 3-4bps softer for meetings beyond October. A cumulative 42bps of easing is priced by year-end.
• The local calendar is relatively light next week, with ANZ Commodity Prices on Monday, the Government’s 9-Month Financial Statements on Tuesday and BusinessNZ Manufacturing PMI next Friday.
• Across the Tasman, the RBA delivers its Policy Decision on Tuesday, with 23 of the 24 economists surveyed by Bloomberg expecting the cash rate to be left at 4.35%. The more contentious issue is whether the RBA re-states its explicit tightening bias.