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NZGBS: Tracking SVB Developments But Underperforming U.S. Tsys

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In line with developments in global FI in Asia-Pac trade, NZGBs open stronger, reverse on policy announcements from U.S. authorities regarding Silicon Valley Bank (SVB) and then richen again to close 9-11bp stronger. The re-strengthening was linked to U.S. Tsy yields pushing below Friday session lows following news that Goldman Sachs no longer expected a hike from the Fed later this month.

  • The 2/10 benchmark curve steepened by 2bp with the NZ/US 10-year differential +7bp.
  • Swaps close 8-10bp richer, implying a wider 3-year swap spread.
  • RBNZ dated OIS softened 7-19bp across meetings led by February-24. April meeting pricing softened to 36bp of tightening with terminal rate expectations falling below the RBNZ’s projected OCR peak of 5.50% to 5.44%.
  • On the local data front, BusinessNZ PSI showed an upbeat 55.8 for February (54.5 in January) while February Food prices rose 1.5% M/M reflecting the impact of Cyclone Gabrielle.
  • Tomorrow’s local calendar sees February REINZ house prices and Net Migration slated ahead of Q4 Current Account on Wednesday and Q4 GDP on Thursday.
  • The market is however likely to remain almost entirely focused on developments in the SVB saga ahead of the release of US CPI for February on Tuesday.
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In line with developments in global FI in Asia-Pac trade, NZGBs open stronger, reverse on policy announcements from U.S. authorities regarding Silicon Valley Bank (SVB) and then richen again to close 9-11bp stronger. The re-strengthening was linked to U.S. Tsy yields pushing below Friday session lows following news that Goldman Sachs no longer expected a hike from the Fed later this month.

  • The 2/10 benchmark curve steepened by 2bp with the NZ/US 10-year differential +7bp.
  • Swaps close 8-10bp richer, implying a wider 3-year swap spread.
  • RBNZ dated OIS softened 7-19bp across meetings led by February-24. April meeting pricing softened to 36bp of tightening with terminal rate expectations falling below the RBNZ’s projected OCR peak of 5.50% to 5.44%.
  • On the local data front, BusinessNZ PSI showed an upbeat 55.8 for February (54.5 in January) while February Food prices rose 1.5% M/M reflecting the impact of Cyclone Gabrielle.
  • Tomorrow’s local calendar sees February REINZ house prices and Net Migration slated ahead of Q4 Current Account on Wednesday and Q4 GDP on Thursday.
  • The market is however likely to remain almost entirely focused on developments in the SVB saga ahead of the release of US CPI for February on Tuesday.