NZGBs Firmer Post-Powell, RBNZ OIS In A Touch

The post-Powell bid in U.S. Tsys has provided a spill over bid for NZGBs in early Thursday trade, leaving the major cash benchmarks 8-9bp richer in a fairly parallel shift.

• Swap rates have outpaced the move lower in yields at the margin, resulting in some light swap spread tightening across the curve.
• The post-Powell impetus has pushed RBNZ dated OIS lower, with just over 60bp of tightening now priced for the first RBNZ meeting of ’23, with terminal rate pricing in to ~5.35%, ~5bp below the respective levels that prevailed in late Wednesday trade.
• Domestically, CoreLogic house price data has revealed an acceleration in the pull lower in house prices as monetary policy continues to tighten, feeding through into mortgage rates and thus house prices.
• The weekly round of NZGB auctions (covering NZGB-27, -33 & -51) headlines the domestic docket during the remainder of the day.