NZGBS: Richer, Off Best Levels, Flatter Curve, US ADP Employment Data Due

NZGBs closed 1-10bps richer across benchmarks after paring morning strength. The initial strength had been induced by a strong rally in US tsys during yesterday’s NY session following lower-than-expected JOLTS job openings data. It also reflected spillover from post-RBA decision strength in ACGBs. The local market was closed at the time of the RBA policy decision.

• With the local data calendar light today, the move away from the best levels likely reflected the 1-3bps cheapening in cash US tsys in today’s Asia-Pac session. After the strong rally overnight, local participants may have used it as an opportunity to square long positions ahead of Friday’s NFP data. Later today the US calendar shows ADP private payrolls.
• Swap rates closed flat to 9bps lower, with the 2s10s curve flatter and implied swap spreads wider.
• RBNZ dated OIS pricing closed little changed, with the expected terminal OCR 1bp firmer at 5.55%.
• Tomorrow, the local calendar is empty, ahead of Q3 Manufacturing Activity on Friday.
• Tomorrow, the NZ Treasury plans to sell NZ$250mn of the 4.5% Apr-27 bond, NZ$200mn of the 1.5% May-31 bond and NZ$50mn of the 2.75% Apr-37 bond.