NZGBS: Weaker, US Tsys Cheapen For Third Successive Day

NZGBs opened 5bp weaker after US Tsys cheapened for the third successive session in the wake of the much stronger-than-expected Empire State Manufacturing Index. The April data came in at +10.8 (consensus -18.0) after -24.6 in March. After the bell, 2-year and 10-year US Tsy yields were 9-10bp higher.

• Swap rates opened 6bp higher with implied swap spreads wider.
• RBNZ dated OIS opened flat to 2bp firmer across meetings with 20bp of tightening priced for May.
• REINZ house sales and price data have been released already today. House prices rose (1.4% M/M) for the first time in 18 months giving some hope that the retreat may have bottomed out. Total sales were down 15% Y/Y in March after being down 31.1% Y/Y in February.
• In Australia, attention will turn to the RBA Minutes for April. After the RBA left the cash rate unchanged at 3.6% (the first pause in this tightening cycle) the market will be searching for clues on the near-term path of policy.
• Further afield, China is scheduled to deliver its March data dump and Q1’23 GDP today. This will provide an update on how the Chinese economy is travelling. The post-lockdown rebound in consumer spending has so far been comparatively lacklustre.