NZGBS: Richer, Curve Steeper, Outperforms ACGBs

NZGBs closed 3-5bp richer with the 2/10 cash curve adding 2bp to yesterday’s steepening move. NZGBs outperformed ACGBs with the NZ-AU 10-year yield differential 4bp tighter. The 2-3bp cheapening in ACGBs after the release of the RBA’s quarterly Statement on Monetary Policy appeared to be more of an unwind of pre-release strength with the net reaction muted.

• Local participants are likely to have largely remained on the sidelines ahead of US Non-Farm Payrolls, particularly with cash tsys closed until the London session due to the observance of a national holiday in Japan. US tsy futures trading was muted in Asia-Pac.
• Swap rates closed flat to 5bp lower with the 2s10s curve 5bp steeper and long-end implied swap spread wider.
• RBNZ dated OIS closed 2-4bp softer across meetings with 23bp of tightening priced for the May 24 meeting.
• The local calendar next week sees April Credit Card Spending, REINZ House Sales and Manufacturing PMI data along with March Net Migration and the RBNZ’s Inflation Expectation data for Q1.
• In Australia, NAB Confidence (Apr) and Building Approvals (Mar) are slated for early in the week.
• Until then, the local market will eye US tsys as they navigate the release of Non-Farm Payrolls for April later today.