NZGBS: Slightly Cheaper, Weaker US PMIs Support US Tsys But Risk Appetite Weighs

In local morning trade, NZGBs are 1-2bps cheaper despite US tsys finishing the NY session modestly richer. The US 2-year yield finished 4bps lower with the 10-year 1bp lower. The NZ-US 10-year yield differential is 3bps wider at +26bps.

• US tsys gapped richer on a lower-than-expected flash PMIs but the gains were pared by the close. PMI Mfg printed at 49.9 (cons 52.0) after 51.9, with services at 50.9 (cons 52.0) after 51.7.
• Stronger than expected new home sales tempered rates support as March marked 693k saar vs 668k prior.
• An improvement in risk appetite saw US equities move higher ahead of corporate results from large technology companies.
• Swap rates are flat to 2bps higher.
• RBNZ dated OIS pricing is unchanged. A cumulative 54bps of easing is priced by year-end.
• NZ’s Trade Balance moved to a surplus of NZ$588mn in March from a revised -NZ$315m in February.
• Australia will release Q1 CPI data today. Bloomberg consensus expects it to ease to 3.5% y/y from 4.1% but for the quarterly rise to pick up. Trimmed mean is forecast to drop to 3.8% from 4.2%, helped by favourable base effects.