NZGBS: Richer, US Tsys Finished Friday Marginally Stronger After NFP

In local morning trade, NZGBs are 4bps richer after US tsys settled marginally richer following the release of the February US Employment Report on Friday. The US 2-year yield declined initially to 4.40% from 4.49%, before closing 3bps lower at 4.47%. The 10-year yield finished 1bp lower at 4.07%.

• US jobs data was mixed, with payrolls increasing by a stronger than expected +275k (+200k est.). However, there was a combined 167k downward revision to the prior two months and the unemployment rate unexpectedly increased to 3.9%, a 2-year high. Wage gains slowed, rising 0.1% in February and 4.3% annually. The report is consistent with a labour market that is gradually easing but no signs of near-term weakness.
• “This is an ambiguous report,” Mohamed El-Erian, president of Queens’ College, Cambridge, and a Bloomberg Opinion columnist, said Friday on Bloomberg Television. So, “high-frequency indicators of economic activity are going to be absolutely essential in the next few months.”
• Swap rates are 3bps lower.
• RBNZ dated OIS pricing is flat to 6bps softer across meetings, with November leading. A cumulative 61bps of easing is priced by year-end.
• Today, the local calendar is empty, ahead of Card Spending data tomorrow.