NZGBS: Firmer, Catching Up With Global Moves

Benchmark NZGBs have richened by 10bp in early trade, undergoing a parallel shift.

• This comes as participants adjust to Wednesday’s rally in core global FI markets, which centred on some pre-U.S. CPI position adjustment, Boston Fed President Collins leaning towards a 25bp hike at the next FOMC, a stepdown in hawkish rhetoric from ECB’s Holzmann, who pointed to support for a more cautious approach re: QT and an MNI ECB sources piece, which flagged that “dovish officials are prepared to seize on an expected slide in headline inflation from the spring to argue for a slowdown in the pace of tightening.”
• Benchmark swap rates are 4-11bp lower, with that curve flattening and swap spreads mixed.
• Key near-term RBNZ dated OIS pricing is essentially unchanged, printing 66bp of tightening for Feb ’23 & a terminal OCR of just below 5.50%.
• Local data flow has seen a continued decline in job ads in December, per the latest BNZ/SEEK data, falling by 6.3% M/M. The data collator noted that “this took the cumulative fall over the last four months to around 20%. Indeed, tracking the trend forward, jobs ads could be back down to pre-COVID levels by the middle of 2023.”
• Building permits saw a M/M bounce in Nov after a more sizable downtick in Oct.
• The domestic docket is now empty for the remainder of the week, with U.S. CPI set to provide the major macro input ahead of the weekend.