BONDS: NZGBS: Bull-Flattener Ahead Of Tariff News, May-32 Syn Tap

• Tsys futures are trading lower today, although within Friday's ranges, volumes are high, however this is largely linked to roll activity, with no notable tsys flows to note, there was however a large buyer in fed funds April 25 futures, 95.685 in 34k. TU is -01 at 103-14+, while TY is trading -02 at 111-01 and now -09 from Friday's highs.
• Cash tsys curves are slightly steeper, with yields 2-3bps cheaper. The 2yr is +2bps at 4.009%, while the 10yr is the worst performing across the curve +2.7bps at 4.235%. The 2s10s is +0.6bps at 22.128.
• Earlier, Zelenskiy expressed willingness to meet Trump for a constructive dialogue to address serious issues, following a tense White House encounter and emphasized Ukraine’s readiness to finalize a minerals deal with the US that was recently paused. Speaking in London on Sunday after a European security summit, Zelenskiy underscored the need for equal dialogue, avoided an apology for prior friction, and defended Ukraine’s dignity while affirming openness to any cooperative format with the US.
• later today we have S&P Global US Manufacturing PMI & ISM data

NZGBs closed showing modest weakness, with benchmark yields 1-2bps higher. 

• With the domestic calendar relatively light, the driver of today’s movements has been US tsys. Cash US tsys are 2-3bps cheaper in today’s Asia-Pac session after an emergency security summit in London on Sunday raised bets that haven demand could lose its appeal should prospects improve for an end to fighting in Ukraine.
• “Treasury futures’ early selloff is likely to reverse in North American trading, as the domestic focus is for slower US growth with traders pricing for the next Federal Reserve rate cut to arrive as early as June. Moreover, the risk of a government shutdown from March 15 appears greater than ever. This would add a downbeat tone to the growth outlook. Meanwhile, recent housing and jobs data is a reminder of the headwinds the US economy is facing.” (per BBG)
• Swap rates closed with a twist-steepener, 1bp lower to 1bp higher.
• Tomorrow, the local calendar will see Building Permits data.
• On Thursday, the NZ Treasury plans to sell NZ$250mn of the 0.25% May-28 bond, NZ$200mn of the 4.25% May-36 bond and NZ$50mn of the 1.75% May-41 bond.

At the Tokyo lunch break, JGB futures are holding weaker at session cheaps, -28 compared to the settlement levels.

• Jibun Bank and S&P Global February Manufacturing PMI rises to 49 from 48.7 in January.
• Cash US tsys are 2-3bps cheaper in today’s Asia-Pac session after an emergency security summit in London on Sunday raised bets of increased European debt supply for defence spending. UK Prime Minister Keir Starmer convened the summit, including France’s Emmanuel Macron, as well as delegations from Canada, Germany, Norway and Turkey, in a bid to strengthen Ukraine’s position, secure a “lasting peace” and plan for security guarantees. (per BBG)
• Cash JGBs are flat (40-year) to 3bps cheaper (5-10-year zone) across benchmarks. The benchmark 10-year yield is 3.0bps higher at 1.408% versus the cycle high of 1.466%.
• The 30-year yield is 0.5bp higher at 2.365%, the highest since 2008.
• Swap rates are 1-2bps higher. Swap spreads are mixed.