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NZGBS: Sharply Richer After A Spike Reversal In US Tsy Yields

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In local morning trade, NZGBs are 7bps richer after US tsy yields pulled back from 16-year highs reached during the European session in response to weaker-than-expected ADP employment data (+81k vs.150k est. and +177k prior). The US tsy 2-year yield finished 10bps lower at 5.05%. The 10-year yield finished down 6bps at 4.73%, after setting a fresh cycle high at 4.88%.

  • US services PMI printed 50.1 (vs 50.2 flash; 50.5 prior), with the composite at 50.2 (vs 50.1 flash; 50.2 prior). The services new orders sub-index fell sharply from 57.5 to 51.8, the lowest level for the year, with the decline reportedly linked to weak domestic and foreign client demand.
  • Swap rates are 6bps lower, with implied swap spreads wider.
  • Following the RBNZ’s hint yesterday that they may opt to maintain a tight monetary policy for an extended period instead of pursuing further tightening, RBNZ-dated OIS rates have continued to soften. They are now 5-10bps softer from pre-decision levels across meetings extending to August 2024.
  • Today, the local calendar sees ANZ Commodity Prices and the Government’s 12-month Financial Statements.
  • Today, the NZ Treasury plans to sell NZ$225mn of the 0.25% May-28 bond, NZ$225mn of the 3.50% Apr-33 bond and NZ$50mn of the 1.75% May-41 bond.
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In local morning trade, NZGBs are 7bps richer after US tsy yields pulled back from 16-year highs reached during the European session in response to weaker-than-expected ADP employment data (+81k vs.150k est. and +177k prior). The US tsy 2-year yield finished 10bps lower at 5.05%. The 10-year yield finished down 6bps at 4.73%, after setting a fresh cycle high at 4.88%.

  • US services PMI printed 50.1 (vs 50.2 flash; 50.5 prior), with the composite at 50.2 (vs 50.1 flash; 50.2 prior). The services new orders sub-index fell sharply from 57.5 to 51.8, the lowest level for the year, with the decline reportedly linked to weak domestic and foreign client demand.
  • Swap rates are 6bps lower, with implied swap spreads wider.
  • Following the RBNZ’s hint yesterday that they may opt to maintain a tight monetary policy for an extended period instead of pursuing further tightening, RBNZ-dated OIS rates have continued to soften. They are now 5-10bps softer from pre-decision levels across meetings extending to August 2024.
  • Today, the local calendar sees ANZ Commodity Prices and the Government’s 12-month Financial Statements.
  • Today, the NZ Treasury plans to sell NZ$225mn of the 0.25% May-28 bond, NZ$225mn of the 3.50% Apr-33 bond and NZ$50mn of the 1.75% May-41 bond.