Weaker NZGBS Start On US TSY Spill Over, Yields Still Sub Early Feb Highs

The early tone to NZGBS is softer, in line with US Tsy weakness through Wednesday's session. We are 0.6 to 1.5bps firmer in yield terms across the benchmarks. This follows a US move of roughly 3-5bps in Wednesday trade, as the FOMC minutes suggested caution around cutting rates.

• For NZ, front end yields are higher, with the 2yr above 4.91%, while the 5yr has risen to 4.65%. We are sub mid Feb highs for these benchmarks (in yield terms).
• In the swap space, the 2yr is around 4bps higher, last near 5.12%, with earlier Feb highs near 5.17% the likely upside focus. The 10yr swap rate is up by a similar amount, last near 4.61%.
• NZ-US 2yr government bond yield spreads are +27bps, not too far from 2024 lows.
• On the data front, the Jan trade data showed a wider deficit versus Dec, but market impact has been minimal. Tomorrow, we get Q4 retail sale volumes. Next week is the RBNZ decision.