NZGBS: Little Changed, ECB Hikes But Signals Peak, PPI & Retail Sales Weighs On US Tsys

In local morning trade, NZGBs are little changed after US tsy yields pushed higher by ~4bp across the benchmarks amid ongoing concerns over inflation given the hotter US PPI and retail sales.

• Energy-impacted headline PPI printed higher than expected (+0.7% m/m versus +0.4% est.), but more labour market-sensitive core producer price inflation slowed to +2.2% annually (from +2.4%) in line with the consensus view.
• Additionally, retail sales rose 0.6% m/m versus expectations of +0.1%. Initial jobless claims rose 4k to 220k, roughly in line with consensus.
• Elsewhere, the ECB raised rates to a record high but sent a clear message it was probably done with raising rates as economic growth slows. The market before the meeting had priced a 65% chance of a hike. Lagarde did however add the caveat that she “can’t say that now we are at peak” in her subsequent comments. Given the dovish forward guidance, European yields are mostly lower overnight.
• (AFR) Have European interest rates reached their cycle peak? Provides sell-side commentary (See link)
• Swap rates are 2bp higher, with implied swap spreads wider.
• RBNZ dated OIS pricing is little changed, with terminal OCR expectations steady at 5.62%
• Today the local calendar sees BusinessNZ Manufacturing PMI for August.