NZGBS: Little Changed, Narrow Ranges, Awaiting US CPI

NZGBs closed flat to 1bp cheaper across benchmarks after dealing in relatively narrow ranges for today’s local session. There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined homebuilding approvals for November.

• With US CPI due later today, local participants have been content to stay on the sidelines, especially with cash US tsys trading little changed in today’s Asia-Pac session.
• Consensus puts core CPI inflation at 0.3% m/m in December, with risk seen to the downside. If analysts are correct, supercore trend rates are likely to remain very strong at 4% annualised handles but treat with some caution as differences in methodology have seen core PCE at notably weaker rates in recent months. (see MNI’s US CPI Preview here)
• Swap rates closed 4-5bps higher, with implied swap spreads ~3bps wider.
• RBNZ dated OIS pricing closed unchanged across meetings. A cumulative easing of 92bps is priced by year-end.
• Tomorrow, the local calendar is once again empty.