NZGBS: Little Changed After US Tsys Cheapened On Friday

NZGB yields are 1bp cheaper in local morning trade after US tsys finished last week with a heavy NY session. US tsys cheapened on the back of an upside surprise by PPI data.

• Headline final demand PPI printed at its highest SA monthly rate since August '23 in January, with the unrounded 0.33% m/m print easily overshooting the 0.1% m/m consensus.
• The core metrics overshot consensus by a larger margin. PPI ex-food and energy at 0.50% m/m (vs 0.1% cons, -0.06% prior) brings the 3mma annualized rate to 2.42% (vs 0.56% prior). Perhaps the one encouraging factor is the 6mma annualized rate, which still moderated a touch to 1.61% (vs 1.75% prior).
• The US 2-year yield finished 7bps higher at 4.64% after spiking to 4.72% on the data. The 10-year was up 5bps to 4.28% after reaching an intraday peak of 4.33%.
• Swap rates are 1bp higher across the curve.
• RBNZ dated OIS pricing is unchanged across meetings. A cumulative 45bps of easing is priced by year-end.
• NZ’s Performance of Services Index rose to 52.1 in January from 48.8 in December, with BNZ stating that the composite measure of PSI and PMI ``suggests that annual GDP growth will soon turn positive''.