Yields Higher As Banking Concerns Recede

NZGBs open 9bp weaker in sympathy with higher U.S. Tsy yields as banking crisis concerns receded on news that U.S. authorities were expanding emergency lending to banks. Equity markets were generally stronger, led by financial stocks. It was also announced that First Citizens Bank would buy Silicon Valley Bank. After the bell the U.S. Tsy curve had bear flattened with 2-year and 10-year yields respectively 23bp and 15bp higher. U.S. STIR pricing closed firmer with a 50/50 chance of a 25bp hike.

• Swap rates shunt 7bp higher, implying tighter swap spreads.
• RBNZ dated OIS opens 1-7bp firmer across meetings with 24bp of tightening priced for April. Terminal OCR expectations push out to 5.19%.
• With the NZ calendar light today, the focus is likely to be on Australian Retail Sales for February. After Q4 GDP revealed weak domestic demand on the back of higher interest rates and higher inflation, the market will be looking to see how much of the strong +1.9% M/M in January is unwound (- 4.0% M/M in December).
• Further afield, there are no major economic data scheduled for Asia and only second-tier releases in the U.S., namely US consumer confidence and the Richmond Fed survey.