NZGBS: Cheaper After US CPI Sparks A Bear Steepening in US Tsys

In local morning trade, NZGBs are 3-6bps cheaper after US tsy yields rose sharply following the release of September CPI data.

• US tsys bear steepened, with yields finishing 9-16bps higher.
• Core CPI rose 0.3% m/m, with the headline rate up 0.4% m/m. Both metrics were forecast to rise 0.3 per cent. Notably, the services component, excluding housing and energy, rose 0.6% m/m. Moreover, the Cleveland Fed’s mean and trimmed mean measures and the Atlanta Fed’s sticky CPI measure all showed a pick-up in core inflation for the second consecutive month.
• Initial jobless claims remained low at 209k.
• NZ’s manufacturing PMI fell to 45.3 in September from 46.1 in August.
• Total and retail card spending data for September printed -0.1% m/m and -0.8% m/m versus revised +0.8% and +0.8% prior.
• Bloomberg reports that New Zealanders vote on Saturday in the 2023 election, with concerns about the soaring cost of living dominating the campaign. Opinion polls indicate the main opposition National Party will be best placed to form a centre-right government with the support of the libertarian ACT Party and the nationalist NZ First Party. (See link)
• Swap rates are 6-9bps higher, with the 2s10s curve steeper.
• RBNZ dated OIS pricing is flat to 3bps firmer across meetings.