NZGBs Firmer On Offshore Lead

Cash NZGBs have benefitted from Wednesday’s late bid in U.S. Tsys, with the major benchmarks running ~7bp richer across the curve in early Thursday trade.

• 2-Year swap spreads are a touch wider, with the remainder of the major swap spread metrics running a touch tighter.
• In domestic news, the RBNZ has published the review of its monetary policy settings in the 2017-2022 window. RBNZ chief economist Conway noted that “the current heightened level of inflation could have been lessened at the margin by an earlier tightening in monetary policy in 2021. However, while we are facing some serious economic challenges, the New Zealand economy has weathered the economic storm created by pandemic and war relatively well. Inflation and unemployment are both low compared to the vast majority of OECD countries.” The release is backwards looking in nature, so fails to provide much in the way of meaningful insight into the future of monetary policy.
• Looking ahead, the issuance of NZ$400mn across NZGB-25, -32 & -37 headlines the domestic docket on Thursday, with participants awaiting the latest U.S. CPI print, which will cross in NY hours.
• Further out, Friday will see the release of food price data and the latest Business NZ manufacturing PMI survey