NZGBS: Slightly Richer After Global Bond Volatility

NZGBs opened 1-3bp richer with the 2/10 cash curve 2bp steeper after another night of global bond volatility.

• The ECB increased the deposit rate by 25bps to 3.25% and announced plans to stop APP bond reinvestments by July. However, the tone of the policy assessment was less hawkish than expected, causing Eurozone yields to fall and market pricing for future ECB hikes to be scaled back to less than 50bps.
• The NY session however was once again gripped by US regional banking concerns with PacWest Bank as the centre of attention. By the end of the NY session, the 2/10 cash curve had twist steepened with 2- and 10-year benchmark yields respectively 1bp lower and 4bp higher.
• Swap rates opened 2-3bp lower.
• RBNZ dated OIS opened 1-4bp softer across meetings.
• No local data with the RBA Statement on Monetary Policy as the Antipodean highlight. After the RBA’s surprise rate hike, the market will pour over the forecast update for clues about the policy outlook. Attention will also be paid to the discussion on services inflation given its emphasis in Tuesday’s decision statement.
• Further afield, the calendar sees China Caixin Services PMI and the Euro Area March Retail Sales ahead of April US Non-Farm Payrolls.