NZGBS: Richer With US Tsys, Q1 GDP Inputs Due

NZGBs are 5bp richer after US tsy yields declined 5-7bp across the benchmarks ahead of US Non-Farm Payrolls late today. US tsys finished near their NY session bests after a volatile first half.

• Stronger-than-expected ADP private employment data saw yields move higher before lower-than-expected unit labour costs (4.2% vs. 6.2%) delivered a quick reversal.
• Fed speak proved mixed ahead Blackout at midnight Friday. Non-voter StL Fed Pres Bullard commented on the need for further hikes, while Philly Fed Harker reiterated his dovish comments from Wednesday.
• Swap rates are 4-5bp lower with the 2s10s curve 1bp flatter.
• RBNZ dated OIS is little changed with terminal OCR expectations at 5.61%.
• Today's local calendar includes the release of Q1 data for the Volume of All Buildings and Terms of Trade. The market expects a -2.0% q/q outcome for building work done, -1.6% was prior. NZ terms of trade is expected to be -1.6% against a prior 1.8%. These indicators will contribute to the assessment of Q1 GDP and provide insights into whether the NZ economy has managed to avoid a technical recession.
• There are no major data releases in China or Europe, with a focus on US May labour market figures later today.