NZGBS: Cheaper After Initial Jobless Claims Push US Tsy Yields Higher

In local morning trade, NZGBs are 3-4bps cheaper after US tsys twist-steepened, pivoting at the 5s, with yields 1bp lower to 5bps higher. US tsys reversed early gains after lower than expected Initial Jobless Claims (187k vs 205k est), not to mention higher than expected Building Permits (1.495M vs 1.476M est) and Housing Starts (1.460M vs 1.425M est, prior down-revised to 1.525M from 1.560M). Chicago Business Barometer, produced with MNI, was revised up to 47.2 in December from 46.9, as a result of the annual seasonal adjustment recalculation.

• Fedspeak: Philly Fed Harker said he expects inflation to fall steadily toward 2% and labour market tightness to continue to ease, suggesting heightened chances of a soft landing. Atlanta Fed Bostic Thursday repeated he expects policymakers to begin cutting interest rates in the third quarter, but added if there is a further accumulation of soft inflation data then cuts could begin sooner.
• Swap rates are 2-4bps higher, with the 2s10s curve steeper.
• RBNZ dated OIS pricing is little changed across meetings. A cumulative 91bps of easing is priced by year-end.
• NZ’s Manufacturing PMI fell to 43.1 in December from a revised 46.5 in November, while Migration data showed a net gain of 127,409 people in the year ended Nov 30.