NZGBS: Slightly Weaker, US Tsys Pressured By Data & Corporate Issuance

NZGBs opened 1bp cheaper following the weaker lead from US tsys in NY trade. US 2- and 10-year yields finished up 3-7bps for the day, but off session cheaps, with the curve flatter. The move away from lows was aided by weaker equities, which contributed to a general risk-off tone due to concerns over the debt ceiling. Retail sales pressured yields with sales ex-autos and gasoline rising 0.6% m/m, higher than the market had expected. Corporate issuance also put pressure on the market as Pfizer issued an eight-part $31 billion deal, one of the largest corporate bond deals on record. Fedspeak echoed recent comments by supporting holding rates but remaining open to hikes based on data.

• Swap rates opened 2bp higher with implied swap spreads wider.
• RBNZ dated OIS opened flat to 2bp firmer across meetings with 25bp of tightening priced for the May 24 meeting.
• Fonterra’s global day trade auction price index falls 0.9%.
• The local calendar is light today ahead of the Budget tomorrow.
• In Australia, the Wage Price Index is scheduled for release with the market closely watching to see if last quarter’s soft outcome is reversed.
• Further afield, Japan sees the release of Q1 GDP and March Industrial Production.