NZGBS: Richer, US Tsys Twist Steepen

In early local trade, NZGBs are 2bp richer after the US tsys curve twist steepens, pivoting at the 5-year, with yields 4bp lower to 4bp higher. Against a backdrop of light newsflow, global rates continue to rise to levels not seen in more than a decade.

• The US 10-year rate traded as high as 4.325% overnight, edging within a single basis point of the 2022 high. Meanwhile, the 30-year rate climbed to 4.42%, surpassing the peak from the previous year and attaining its highest level since 2011. The 2-year rate has maintained its position just below 5%.
• The NZ-US 10-year yield differential is 1bp tighter at +76bp.
• Swap rates are 2-3bp lower with the 2s10s curve and implied swap spreads largely unchanged.
• RBNZ dated OIS pricing is little changed across meetings, with terminal OCR expectations sitting at 5.67%.
• NZ's Fonterra Co-operative Group on Friday cut its forecast for farmgate milk prices for the second time this month, hurt by weakness in the global dairy industry. The dairy company now expects to pay NZ$6.00-NZ$7.50 per kilogram of milk solids (kgMS) for the 2023-2024 season, down from its earlier forecast of NZ$6.25-NZ$7.75 per kgMS. (See link)
• Today the local calendar is empty.