JGBS: Futures Weaker Overnight After Another Heavy Session For US Tsys

New Zealand food prices rose 0.5%m/m in March, reversing the fall seen in Feb. Outside of fruit and vegetables prices were all up for the sub-sectors. Stats NZ noted: "Food prices increased 3.5 percent in the 12 months to March 2025, following a 2.4 percent increase in the 12 months to February 2025". We are still well sub 2023 highs though above 12% y/y. 

• In terms of the other m/m details released, rents edged up 0.3% (form 0.2%), but petrol and diesel prices were down over 2% in m/m terms. International air travel was also down for the third straight month.
• Domestic air travel, up 2.2%, along with accommodation services, up 5.7%m/m, provided some offset.
• Similar trends were evident in terms of y/y outcomes. Petrol and diesel are down noticeably in y/y terms but above 2024 lows.
• Earlier remarks from RBNZ Chief Economist Conway noted that inflation risks have shifted to the downside. This reflects global trade policy shifts, which will most likely weaken global and NZ growth. The central bank is analyzing the tariff impact ahead of the May MPS, but the scope to cut rates is still there. 

In local morning trade, NZGBs are 4bps richer after a solid rally by US tsys. 

• Overnight, US tsys found some relief and rallied most of the day. The US 10-year yield ranged from 4.3583% to 4.4816%, closing near the lows around 4.37%. Trump’s decision to exempt certain technology products stoked risk appetite, and the price action pointed to money being put back to work.
• In a speech posted on the RBNZ website, Chief Economist Paul Conway stated: “To reiterate key messages made by the Monetary Policy Committee in our Monetary Policy Review last week, higher tariffs and uncertainty about global trade policy mean economic activity globally and in New Zealand will most likely be weaker than expected.” “At this stage, the likely impacts on inflation in New Zealand are more ambiguous, but the balance of risks has shifted to the downside.”
• March food prices rise 0.5% m/m.
• Swap rates are 5-6bps lower.
• RBNZ dated OIS pricing is little changed across meetings out to February 2026. 31bps of easing is priced for May, with a cumulative 80bps by November 2025.
• On Thursday, the NZ Treasury plans to sell NZ$275mn of the 3.00% Apr-29 bond and NZ$225mn of the 4.25% May-36 bond.

• For any investor, the chopping and changing on tariffs is difficult and gold is no different.
• Having hit new highs, yesterday saw gold slip lower into the close as profit taking on strong gains was evident.
• Gold had hit a new high of US$3,245.74 before slipping lower into close at $3,210.93
• South African miner Gold Fields Ltd has been ordered to stop mining its lease and leave one of its mines in Ghana after the rejection of a lease extension.
• West Australian miner Bellevue Gold is the target of several takeovers as the soaring cost of gold eats into its cashflow due to soaring hedge costs.
• The PBOC is offering increased quotas to banks for gold imports to meet the domestic demand from institutional and retail investors.
• Despite the overnight decline, gold remains steadfast above all major moving averages with the nearest, the 20-day EMA, at $3,090.32