BONDS: NZGBS: Yields Firm +7bps, But NZ-US 10 Still In Downtrend

NZGB yields are up a little over 7bps in Monday trade to fate. This puts the 2yr to 3.525%, while the 10yr is around 4.585%. We have played catch up with US Tsy moves, post Friday's NFP beat and the higher oil prices since the open amid fresh Israel-Iran strikes. US Tsy yields have risen a further 2.5 to 4.5bps, led by the front end. 

• The 2yr is now testing the 50-day EMA resistance point in yield terms, with upside focus likely on a move back above 3.60%. For the 10-yr the focus will be on a move up through 4.60%. Late May highs were around 4.65%.
• The NZ-US 10yr spread is around +3bps, up from flats. Still, downside risks persist for the spread. Greater risk rests from the US leg, given the up coming US CPI print.
• In NZ this week, the main events this week will be on Friday with some monthly data and RBNZ chief economist Conway speaking. The May BNZ manufacturing PMI is released on Friday. The index moderated to 50.5 in April from 52.8 but has held in expansionary sector since June last year.
  • There is further manufacturing sector data on Tuesday with Q1 volumes and activity.