NZGBS: Little Changed After RBNZ Gov. Orr’s Speech

In local morning trade, NZGBs are little changed following a speech from RBNZ Governor Orr earlier today. Note that Governor Orr didn't touch on the rates outlook in the speech. The Governor stated: "Tackling these persistent inflationary pressures and bringing levels of ‘core’ inflation in line with our 1 to 3% target is an important part of bringing inflation back down to the 2% midpoint." You can see the full speech at this link.

• Overnight, US tsys finished Thursday’s NY session moderately richer. US tsys bull-flattened, with yields flat to 3bps lower.
• US tsys had initially gapped richer after lower than expected Retail Sales (-0.8% m/m vs. -0.2% est. and 0.6% prior), however, those gains were subsequently pared.
• The core Retail Sales categories also started the year on a negative note, in contrast to relative strength at the end of 2023. Overall, the contractions pointed to the weakest report since March 2023.
• Meanwhile, Initial Jobless Claims printed less than expected: 212k vs. 220 est.
• Swap rates are 1-3bps lower, with the 2s10s curve steeper.
• RBNZ dated OIS pricing is 1-5bps softer across meetings. A cumulative 50bps of easing is priced by year-end.
• BusinessNZ Manufacturing PMI printed 47.3 in January vs. 43.4 prior.