MNI China Daily Summary: Wednesday, December 11

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MNI: US NOV SUPERCORE CPI (CORE SERVICES EX-HOUSING) 0.342%

MNI: US NOV CPI UNROUNDED M/M 0.313%, CORE 0.308%

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NZGBS: Closed On A Positive Note, Solid Demand Seen At Weekly Auction

BONDS

NZGBs closed on a strong note with benchmark yields 9-11bp lower despite retail card spending rising 1% m/m in June versus -1.7% in May. Core retail card spending was however unchanged m/m. Food prices rose 1.6% in June versus +0.3% prior, while Business NZ manufacturing PMI declined to 47.5 from a revised 48.7.

  • Today’s weekly auction saw solid demand for the May-31 and May-51 lines with cover ratios of 3.35x and 3.71x respectively. The cover ratio for the May-26 bond was 2.49x. The longer-dated cash lines were 2-4bp richer post-auction.
  • NZ-US and NZ-AU 10-year yield differentials closed 1bp and 3bp tighter respectively.
  • Swap rates closed 7-11bp lower with the 2s10s curve 1bp flatter and implied swap spreads wider.
  • RBNZ dated OIS closed 6-14bp softer for meetings beyond October with terminal OCR expectations at 5.64%.
  • Bloomberg reports that economists have called an end to New Zealand’s housing slump, saying the latest data show the market has found a floor and prices are starting to recover. A REINZ report released Thursday in Wellington showed house prices rose 0.4% in June while sales continued to recover. (See link)
  • Tomorrow is a public holiday in NZ.
  • Later today sees the market attention tuned to June US PPI and US Jobless Claims data.
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