NZGBS: Sharply Richer With US Tsys

NZGBs opened 8-9bp richer, following yesterday’s ANZAC Day holiday, after the risk off tone to global markets pushes US Tsys lower in NY trade. S&P 500 closed down 1.25% with banks underperforming (KBW banking index down 3.6%). First Republic Bank had a disappointing Q1 with a 41% deposit outflow. The bank did not provide any forward guidance or presentation to accompany its results, adding to the negative sentiment. US Tsy 2-year and 10-year yields respectively 13bp and 9bp lower after the bell with the former close to 25bp lower than levels prevailing before ANZAC day.

• Swap rates opened 8bp lower with the short-end implied swap spread wider.
• RBNZ dated OIS opened with pricing 5-10bp softer for meetings beyond
• The local calendar is slated to release March ANZ Truckometer and Trade Balance data today. Imports have started to reflect weaker domestic demand.
• The RBNZ proposed changes to the LVR restrictions in a statement on its website saying that house prices have fallen to a level that is more consistent with medium-term fundamentals. Accordingly, the risk to financial stability posed by high-LVR lending has been reduced.
• The NZ Treasury announced that it plans to sell NZ$1.6bn of NZGBs in May with each weekly auction being NZ$400mn.