NZGBS: Twist Steepening As US Tsys Bear Steepen

In local morning trade, the NZGB curve sees a twist-steepening, with yields from 1bp lower to 4bps higher. The failure of diplomatic efforts to bring all sides of the Middle East conflict together for negotiations added to the threat of widening the conflict.

• Global bonds remained under pressure with US tsys making fresh multi-year highs ahead of a widely anticipated speech by Fed Chair Powell later today.
• Long-end US tsys led the sell-off, despite a better than feared 20-year auction result. Nevertheless, fiscal policy concerns remain with the massive and increasing budget deficit and debt.
• US tsys finished with yields 1-8bps higher. The yield on the US 10-year note finished at 4.91%, +8bps, after reaching a fresh cycle high of 4.9255%. The 2-year yield finished at 5.22%, just shy of its cycle high of 5.24%.
• Swap rates are 4-8bps higher, with the 2s10s curve steeper and implied swap spreads sharply wider.
• RBNZ dated OIS pricing is little changed across meetings, with terminal OCR expectations at 5.65%.
• Today, the local calendar is empty, ahead of trade balance data tomorrow.
• Today, the NZ Treasury plans to sell NZ$200mn of the May-26 bond, NZ$200mn of the May-34 bond and NZ$100mn of the May-41 bond.