NZGBS: Cheaper On Catch Up, CPI Data Coming Into View

NZGB yields move higher in lieu of the cheapening observed in EGBs and U.S. Tsys on Friday, where hawkish ECB speak (which continued over the weekend) pressured the former, while spill over from the ECB speak, rate locking activity and some positioning adjustments after a notable YtD rally drove the latter (albeit with some dovish Fed communique allowing Tsys to base ahead of the NY close).

• The major NZGB benchmark yields are 10-11bp as a result, in a parallel shift.
• Swap rates are ~4bp higher across the curve, lagging the move in bonds.
• Note that a regional holiday in Wellington will thin out liquidity in NZ markets today.
• The key short-term RBNZ dated OIS measures are little changed to start the week, showing 65bp of tightening for next month’s gathering, alongside a terminal OCR of just under 5.45%.
• Politics dominated locally over the weekend after last week’s resignation from PM Ardern. The Labour party’s Chris Hipkins was chosen unanimously to replace Ardern. He is due to be sworn in as PM on Wednesday. Hipkins, Police and Education Minister, was the only one to stand for the position.
• Looking ahead, Q4 CPI data (Wednesday) provides the highlight of the domestic economic calendar this week, with the latest PSI survey, credit card spending data, trade balance and the monthly ANZ business survey set to supplement the headline release throughout the week.