NZGBS: Richer, Outperforms $-Bloc

NZGBs closed at session bests, 6bp richer across benchmarks, as cash US tsys opened richer across the curve beyond the 2-year after yesterday’s Memorial Day holiday.

• NZGBs nonetheless outperformed the $-Bloc with the NZ/US and NZ/AU 10-year yield differentials respectively 2bp and 3bp tighter.
• Swap rates closed 4-6bp lower with implied swap spreads wider.
• RBNZ dated OIS closed 1-7bp softer across meetings with late’23 /early’24 leading.
• Home-building approvals fell 2.6% m/m in April versus a revised +6.6% in March. Standalone house approvals fall 2.1% m/m.
• In a Bloomberg article, ANZ (NZ) expects house prices to start rising in the second half of 2023, several quarters earlier than expected, in response to looser monetary conditions and surging immigration (link).
• The local calendar sees the release of ANZ Business Confidence (May) and CoreLogic House Prices (May). The upcoming May confidence survey is anticipated to reveal a persisting weakness in business sentiment. Nevertheless, the overall economic landscape presents a mixed picture. While retailers and participants in the construction sector are expected to report subdued conditions, businesses operating in service sectors such as hospitality are expected to experience more robust activity levels.