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BONDS: NZGBS: Cheaper With US Tsys After Hotter Core CPI

BONDS
BulletMarketsFixed Income Bullets

In local morning trade, NZGBs are 2bps cheaper after a bear-flattening of the US tsy curve following hotter-than-expected US Core CPI.

  • US Core CPI surprised higher in August on a housing inflation rebound, rising 0.281% last month against expectations for a 0.2% increase. Headline CPI added 0.187%, in line with expectations. That brought the 12-month rate for Headline and Core CPI to 2.5% and 3.2% respectively.
  • Owners' Equivalent Rent rose 0.50% last month, its strongest increase since January. Rent inflation slowed a tad to 0.37% from 0.49% the previous month. Core services prices excluding housing costs, or supercore CPI, accelerated to a 0.328% increase over the month from 0.207% in July.
  • The markets now turn their focus to today's US PPI and Weekly Claims data.
  • NZ Food Prices rose 0.2% from a month earlier in August
  • NZ Total Card Spending fell 0.2% m/m in August versus a revised +0.6% in July.
  • Swap rates are 2bps higher.
  • RBNZ dated OIS pricing is 1-3bps firmer for meetings beyond Mar-25. A cumulative 80bps of easing is priced by year-end.
  • The NZ Treasury plans to sell NZ$300mn of the 3.00% Apr-29 bond, NZ$150mn of the 4.50% May-35 bond and NZ$50mn of the 2.75% Apr-37 bond.
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In local morning trade, NZGBs are 2bps cheaper after a bear-flattening of the US tsy curve following hotter-than-expected US Core CPI.

  • US Core CPI surprised higher in August on a housing inflation rebound, rising 0.281% last month against expectations for a 0.2% increase. Headline CPI added 0.187%, in line with expectations. That brought the 12-month rate for Headline and Core CPI to 2.5% and 3.2% respectively.
  • Owners' Equivalent Rent rose 0.50% last month, its strongest increase since January. Rent inflation slowed a tad to 0.37% from 0.49% the previous month. Core services prices excluding housing costs, or supercore CPI, accelerated to a 0.328% increase over the month from 0.207% in July.
  • The markets now turn their focus to today's US PPI and Weekly Claims data.
  • NZ Food Prices rose 0.2% from a month earlier in August
  • NZ Total Card Spending fell 0.2% m/m in August versus a revised +0.6% in July.
  • Swap rates are 2bps higher.
  • RBNZ dated OIS pricing is 1-3bps firmer for meetings beyond Mar-25. A cumulative 80bps of easing is priced by year-end.
  • The NZ Treasury plans to sell NZ$300mn of the 3.00% Apr-29 bond, NZ$150mn of the 4.50% May-35 bond and NZ$50mn of the 2.75% Apr-37 bond.