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BONDS: NZGBS: Closed Cheaper But At Session Bests After Infl Exps Data

BONDS
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NZGBs closed modestly cheaper but at session bests, benchmark yields 2bps higher, after the release of RBNZ inflation expectations data. 

  • The RBNZ’s Q1 survey showed inflation expectations hovering just above the 2% midpoint of the target band. The 1-year measure picked up to 2.15% from 2.05%, while 2 years ahead moderated to 2.06% from 2.12%, just below Q4’s headline 2.2% rate but above core at 3.1%.
  • The outcomes should reassure the MPC that inflation expectations remain well anchored and allow it to ease by 50bp again on February 19 given weak activity. The Q1 household survey measure of inflation expectations is to be released on February 18 and while it tends to run above the business measure, it also has moderated significantly.
  • Cash US tsys are 1-2bps richer in today’s Asia-Pac session after yesterday’s aggressive post-CPI sell-off. Fed chair Powell cautioned against getting "excited" about yesterday's CPI report ahead of PPI (today 0830 ET), reminding that the latter report carries potentially different implications for the Fed's preferred PCE gauge: "The CPI reading was above almost every forecast.”
  • Swap rates closed 2-4bps higher.
  • Tomorrow, the local calendar will see BusinessNZ Manufacturing PMI and Food Prices.
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NZGBs closed modestly cheaper but at session bests, benchmark yields 2bps higher, after the release of RBNZ inflation expectations data. 

  • The RBNZ’s Q1 survey showed inflation expectations hovering just above the 2% midpoint of the target band. The 1-year measure picked up to 2.15% from 2.05%, while 2 years ahead moderated to 2.06% from 2.12%, just below Q4’s headline 2.2% rate but above core at 3.1%.
  • The outcomes should reassure the MPC that inflation expectations remain well anchored and allow it to ease by 50bp again on February 19 given weak activity. The Q1 household survey measure of inflation expectations is to be released on February 18 and while it tends to run above the business measure, it also has moderated significantly.
  • Cash US tsys are 1-2bps richer in today’s Asia-Pac session after yesterday’s aggressive post-CPI sell-off. Fed chair Powell cautioned against getting "excited" about yesterday's CPI report ahead of PPI (today 0830 ET), reminding that the latter report carries potentially different implications for the Fed's preferred PCE gauge: "The CPI reading was above almost every forecast.”
  • Swap rates closed 2-4bps higher.
  • Tomorrow, the local calendar will see BusinessNZ Manufacturing PMI and Food Prices.