NZGBS: Closed On A Positive Note After AU CPI Sparks A Rally

NZGBs closed on a positive note with benchmark yields 3-5bp lower than session highs. The move away from session cheaps was assisted by a rally in ACGBs following lower-than-expected Q2 CPI data. By the close, the cash 2/10 curve had twist steepened with yields 1bp lower to 2bp higher. NZ/AU 10-year yield differential widened 4bp to +64bp.

• Swap rates closed mixed with rates -1bp to +1bp and the 2s10s curve steeper.
• RBNZ dated OIS pricing closed little changed. Terminal OCR expectations sit at 5.66% versus 5.70% late last week.
• Tomorrow the local calendar is empty. The next key release is ANZ Consumer Confidence (Jul) on Friday.
• Later today, the market’s focus will be firmly tuned to the FOMC meeting decision. While the market has already priced in a 25bp hike for the FOMC meeting today, there remains significant uncertainty about the Fed's outlook. Investors are keenly waiting for comments from Fed Chair Powell during the press conference following the rate decision. His statements may provide valuable insights into the central bank's plans for further interest rate increases.
• Tomorrow the NZ Treasury plans to sell NZ$225mn of the 0.5% May-26 bond, NZ$225mn of the 1.5% May-31 bond and NZ$50mn of the 2.75% May-51 bond.