NZGBS: Weaker, Global Bond Yields Higher After ECB Lagarde & US Data

In early local trade, NZGBs are trading 1-3bp cheaper after global bond yields moved higher following hawkish commentary from ECB president Lagarde and firm data in the US. President Lagarde's speech at the ECB's forum in Sintra adopted a hawkish tone, indicating that the ECB is preparing for an interest rate hike in July and that officials do not foresee an imminent end to the current economic cycle.

• In May, durable goods orders experienced a 1.7% month-on-month increase, surpassing expectations of -0.9%. Additionally, new home sales saw a substantial 12.2% m/m rise in May, contrary to the expected -1.2% decline. Furthermore, the US Conference Board Consumer Confidence Index exceeded expectations and reached its highest level since January 2022.
• Swap rates are unchanged with implied swap spreads tighter.
• RBNZ dated OIS pricing is little changed with terminal OCR expectations at 5.64%
• The local calendar is light again today.
• In Australia, the CPI Monthly for May is slated with the market expecting +6.1% y/y versus +6.8% in April.
• NZ Treasury plans four nominal bond auctions in July with each weekly auction offering NZ$500m of bonds. Subject to market conditions, it is expected that a syndicated tap of the existing April 2033 nominal bond will be undertaken in July.