NZGBS: Drifted Richer With US Tsys, Aussie Market Closed

NZGBs closed 4-5bps richer, with the 2/10 curve flatter. With the domestic calendar empty and the Australian market closed for Australia Day, the local market has drifted richer with US tsys during today’s Asia-Pac session.

• US tsy yields are dealing 1-2bps richer, with a slight flattening bias present ahead of Friday’s US data drop of Personal Income & Spending, PCE Deflator, Pending Home Sales and Dallas Fed Manf. Activity data. The monthly PCE Deflator for December is the standout ahead of Next week’s FOMC policy meeting.
• ICYMI, RBNZ Chief Economist Conway will deliver a keynote speech on 30 January. The speech will focus on the significant changes to the global economy since the COVID-19 pandemic. He will also make brief comments on domestic data developments since the November Monetary Policy Statement.
• Bloomberg reported that ANZ sees slack emerging across the NZ economy, which will take the wind out of domestic inflation. They see CPI inflation slowing to 2.5% in Q3 from 4.7% in Q4 2023. (See link)
• Swap rates are 5-6bps lower.
• RBNZ dated OIS pricing is flat to 4bps softer across meetings, with August-November leading.
• Next week, the local calendar sees Trade Balance data on Monday, ANZ Business Confidence on Wednesday, CoreLogic House Prices on Thursday and ANZ Consumer Confidence and Building Permits on Friday.