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NZGBS: Weaker, Mid-Range, US Earnings Eyed

BONDS

NZGBs closed with yields flat to 4bp higher but off session cheaps as Asia-Pac participants digested the negative lead from US Tsy ahead of the weekend. NZGBs outperformed the $-Bloc with the NZ/US and NZ/AU 10-year yield differentials respectively -7bp and -4bp.

  • Swap rates closed 3-6bp higher, implying wider swap spreads, with the 2s10s curve 3bp flatter.
  • RBNZ dated OIS closed with pricing 1-5bp firmer across meetings with Apr-24 leading. 20bp of tightening priced for May with 25bp of easing priced for Nov-23 off a terminal OCR expectation of 5.49% (July).
  • The Performance Services Index fell 1.4pts in March but remained in expansion territory. Activity/Sales component rose 2.8pts but New Orders fell 3.2pts. Food Prices rose 0.8% M/M (+12.1% Y/Y) with weather-impacted fruit & vegetables and grocery food as the key drivers.
  • March REINZ house sales and price data are scheduled for release tomorrow ahead of Q1 CPI on Thursday.
  • In Australia, the RBA Minutes for April are slated for release tomorrow.
  • With the US calendar relatively this week, the market will be eyeing US Tsys reaction to US earning season and Fedspeak. US Tsy yields were guided higher ahead of the weekend in part due to higher-than-expected large bank earnings.

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