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BONDS: NZGBS: Closed Richer & At Session Bests After Q3 CPI Miss

BONDS
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NZGBs closed 3-5bps richer across benchmarks on the day, 2-4bps richer than pre-CPI levels. 

  • Q3 NZ CPI came in slightly below forecasts at 0.6%q/q (mkt consensus was 0.7%, while the RBNZ projected a 0.8% rise). The Q2 outcome was 0.4%. In y/y terms inflation was 2.2%, in line with market expectations, while the RNZ projected a 2.3% rise.
  • Annual headline inflation is back within the RBNZ's 1-3% target band for the first time since early 2021. Non-tradabables inflation, a measure of domestic price pressures is still quite elevated in y/y terms, back to 4.9% for Q3. This is comfortably above longer-term averages.
  • Still, measures of core inflation like the trimmed mean eased to 2.5%y/y in Q3 from 3.7%, while the weighted median was at 2.8% y/y in Q3 from 3.5% prior.
  • Swap rates closed 4-7bps lower, with the 2s10s curve steeper.
  • RBNZ dated OIS pricing is 2-5bps softer after the CPI data and 5-9bps softer on the day across meetings. 58bps of easing is priced for the November meeting, with a cumulative 99bps by February.
  • Tomorrow, the local calendar is empty apart from the NZ Treasury’s planned sale of NZ$175mn of the 1.50% May-31 bond, NZ$250mn of the 4.25% May-34 bond and NZ$75mn of the 1.75% May-41 bond.
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NZGBs closed 3-5bps richer across benchmarks on the day, 2-4bps richer than pre-CPI levels. 

  • Q3 NZ CPI came in slightly below forecasts at 0.6%q/q (mkt consensus was 0.7%, while the RBNZ projected a 0.8% rise). The Q2 outcome was 0.4%. In y/y terms inflation was 2.2%, in line with market expectations, while the RNZ projected a 2.3% rise.
  • Annual headline inflation is back within the RBNZ's 1-3% target band for the first time since early 2021. Non-tradabables inflation, a measure of domestic price pressures is still quite elevated in y/y terms, back to 4.9% for Q3. This is comfortably above longer-term averages.
  • Still, measures of core inflation like the trimmed mean eased to 2.5%y/y in Q3 from 3.7%, while the weighted median was at 2.8% y/y in Q3 from 3.5% prior.
  • Swap rates closed 4-7bps lower, with the 2s10s curve steeper.
  • RBNZ dated OIS pricing is 2-5bps softer after the CPI data and 5-9bps softer on the day across meetings. 58bps of easing is priced for the November meeting, with a cumulative 99bps by February.
  • Tomorrow, the local calendar is empty apart from the NZ Treasury’s planned sale of NZ$175mn of the 1.50% May-31 bond, NZ$250mn of the 4.25% May-34 bond and NZ$75mn of the 1.75% May-41 bond.