NZGBS: Little Changed, Muted Summer Session For US Tsys, Q2 CPI Tomorrow

In early local trade, NZGBs are little changed after a typical muted summer session in NY following last week’s full docket of CPI and PPI. Limited reaction to small beat for July Empire Fed manufacturing index. US tsys finished flat to 3bp richer with the curve steeper.

• US equities moved higher through the session driven by the easing concerns related to the Fed tightening and fears of a recession, which managed to outweigh worries about the slowdown in China. Additionally, investor sentiment was lifted by the anticipation that the earnings season would likely be better than initially feared.
• Swap rates are flat to 1bp lower with the 2s10s curve flatter.
• RBNZ dated OIS is little changed across meetings with terminal OCR expectations sitting at 5.63%.
• Today the local calendar is light ahead of Q2 CPI data on Wednesday. Consensus expects headline CPI to print +0.9% q/q in Q2 with the annual rate dropping to 5.9% y/y from 6.7%. Bloomberg reports that economists now expect a sharper decline in inflation as petrol prices fall and soaring mortgage rates curb household spending. (See link)
• In Australia, the RBA Minutes for the July meeting will be released today, with more details about the July pause provided.