NZGBS: Closed Little Changed, Narrow Ranges, Awaiting US CPI

NZGBs closed little changed after dealing in a narrow range during the local session. REINZ house price and sales, and food prices data failed, as expected, to provide a significant domestic driver.

• Annual food prices were 8.9% higher in August but lower than the 9.6% y/y seen in July. "Prices for fruit and vegetables such as tomatoes, grapes, cucumbers, and nectarines contributed the most to the overall monthly rise," said Stats NZ's consumer prices manager James Mitchell.
• Accordingly, local participants were likely on headlines and US tsys watch ahead of key US CPI data later today. Consensus is at +0.6% m/m and +0.2% m/m for headline and core respectively (3.6% y/y and 4.3%) versus prior +0.2% m/m and +0.2% m/m (3.2% y/y and 4.7%).
• US tsys are are holding marginally cheaper through the Asia-Pac session. Ranges remain narrow, with US tsys sitting ~1bp cheaper across the major benchmarks.
• Swap rates closed 1-3bp higher, with implied swap spreads slightly wider.
• RBNZ dated OIS pricing closed flat to 2bp firmer across meetings, with terminal OCR expectations steady at 5.62%.
• Tomorrow the local calendar is empty.
• Tomorrow the NZ Treasury plans to sell NZ$200mn of the 0.50% May-26 bond, NZ$200mn of the 1.50% May-31 bond and NZ$100mn of the 1.75% May-41 bond.