NZGBS: Firmer On Global Cues

Cash NZGBs have extended on yesterday’s late rally with the post-BoJ impetus and a further bid in U.S. Tsys, in receipt of soft U.S. data, aiding the direction of travel (yesterday’s session only caught a portion of the BoJ-related bid). The major benchmarks sit 12-14bp lower, with the front end leading the bid as the curve bull steepens.

• Swap rates are 4-11bp lower across the curve, in a flattening move, although they have edged away from their early session lows. Swap spreads are wider across the curve as a result.
• The major near-term RBNZ dated OIS pricing points remain essentially as they were at yesterday’s close, with ~62bp of tightening showing for next month’s meeting, alongside a terminal OCR of 5.40-5.45%.
• The latest M/M food price print revealed a 1.1% move higher in December, with domestic inflationary pressures already well documented.
• Supply in the form of NZGB-28, -32 & -41 is due later today, with non-resident bond holding data also set to cross.