NZGBS: Sharply Richer, FOMC Steady, ADP & ISM Mfg Weaker Than Expected

In local morning trade, NZGBs are 7-12bps richer after the FOMC left rates unchanged for the second consecutive time. While discussing whether every meeting is "live", Chairman Powell said, "We are going meeting by meeting, asking ourselves whether we achieved a stance of policy sufficiently restrictive to bring inflation down 2% over time" and "We have come very far with this rate hiking cycle, very far." The projected Fed terminal rate slipped to 5.395% in Jan’24.

• US tsys shunted richer, with yields 14-21bps lower. The 10-year yield finished 20bps lower at 4.73%.
• Early, US tsys shifted richer after lower-than-expected ADP private jobs data (113k vs. 150k est, 89k prior). The move extended after weaker-than-expected ISM data: Mfg (46.7 vs. 49.0 est), Employ (46.8 vs. 50.6 est), New Orders (45.5 vs. 49.8 est) and Prices Paid (45.1 vs 45.0 est).
• Additionally, Construction Spending printed in line with expectations, while JOLTS Job Openings firmed (9.553M vs. 9.400M est).
• Swap rates are 9-15bps lower, with the 2s10s flatter.
• RBNZ dated OIS pricing is flat to 10bps softer, with Oct’24 leading.
• The local calendar is empty today.
• Today, the NZ Treasury plans to sell NZ$225mn of the May-30 bond, NZ$175mn of the May-34 bond and NZ$100mn of the May-51 bond.