NZGBS: Closed Little Changed But Near Session Bests After Infl. Expn. Data

NZGBs closed at or near the session’s best levels, with benchmark yields flat to 1bp lower, after the RBNZ’s measures of business inflation expectations eased in Q1. The 2-year ahead is now at the mid-point of the target band at 2.5% down from 2.8% in Q4 and the 1-year ahead is close to the top of the band at 3.2% down from 3.6%, but both are above the RBNZ’s CPI forecasts.

• The RBNZ also monitors household inflation expectations which are released on February 22. The RBNZ Policy Decision is on 28 February.
• Cash US tsy yields are dealing little changed across benchmarks in today’s Asia-Pac session, with news flow light.
• The swap curve has twist-steepened, with rates 5bps lower to 4bps higher.
• RBNZ dated OIS pricing is 3-6bps softer across meetings today. A cumulative easing of 50bps is priced for year-end from a peak of 5.62%. This compares to 100bps of easing off 5.53% at the end of January.
• Tomorrow, the local calendar sees REINZ House Sales, Card Spending and Food Prices data.