BONDS: NZGBS: Closed Richer At Session Bests Despite Strong Mfg Data

NZGBs closed richer and session bests, with benchmark yields 4bps lower. 

• MNI - There was a strong rise in Q1 manufacturing volumes, which with a solid rise in real retail sales and export volumes in the quarter should support GDP growth which is released 18 June. The RBNZ has a 1% q/q Q1 increase in its May forecasts as most of the quarter occurred before the onset of the Iran War. It is likely to be felt in Q2 though with the RBNZ expecting growth to be flat on the quarter.
• The NZ-US 10-year yield differential is flat, the lowest since November.
• Cash US tsys are ~1bp richer in today's Asia-Pac session after finishing Monday's session showing a modest bear-steepener, with benchmark yields 1-4bps higher. Traders have resumed pricing in a quarter-point Fed hike by year-end due to a stronger-than-expected labour market and higher inflation. The focus is on May CPI data on Wednesday.  
• RBNZ-dated OIS pricing is little changed across meetings. 22bps of tightening is priced for July, while February 2027 assigns 88bps.
• Tomorrow, the local calendar will be empty until Friday’s release of BusinessNZ Manufacturing PMI and Net Migration data.
• On Thursday, the NZ Treasury plans to sell NZ$225mn of the 3.00% Apr-29 bond and NZ$225mn of the 3.50% Apr-33 bond.