NZGBs Steepening In Sympathy With Tsy Weakness On Thursday

Thursday’s shift higher in U.S. Tsy yields has applied some pressure to NZGBs during the early rounds of Friday trade, with the major benchmarks running 2.0-7.5bp cheaper on the day, bear steepening.

• Local ANZ consumer confidence data was flat on the month, operating comfortably below the breakeven 100 mark. The survey collator noted that “living costs are rising, house prices are falling, and mortgage rates are going up. However, the big win for households is the still super-tight labour market, which is contributing to strong job security and solid wage growth.”
• Elsewhere, monthly building permits data saw a dip in M/M terms.
• Looking ahead, next week’s RBNZ decision provides the key domestic risk event in the coming days, with ~55bp of tightening now priced into OIS. Note that all of the economists surveyed by both BBG and RTRS look for a 50bp step next week. Terminal rate pricing continues to hover around 4.85%.
• Chinese official PMIs and Caixin manufacturing PMI data provide offshore points of interest ahead of the weekend.