NZGBS: Little Changed, Subdued Trading Overnight, Real Retail Sales Due

In local morning trade, NZGBs are unchanged after a subdued overnight session. Newsflow remained quiet, with trading in US tsys light ahead of the Jackson Hole forum. The US 10-year yield achieved a fresh 16-year high of 4.36%, before finishing 1bp lower on the day at 4.32%. The curve has flattened, with the 2-year yield up 5bp, and back above the 5% threshold.

• There was little reaction to the economic data. Philly Fed non-manufacturing survey saw regional activity slip in August, falling to -13.1 vs +1.4 prior, while a drop in existing home sales -2.2% M/M (cons -0.2%) spurred some short covering.
• Trading desks are anticipating a hawkish tone from Fed Chair Powell at the economic summit in Jackson Hole that informally kicks off Thursday evening and runs through Saturday.
• Swap rates are 2bp lower.
• RBNZ dated OIS pricing is unchanged across meetings, with terminal OCR expectations at 5.71%.
• The RBNZ will be “mindful” of the depreciation in the NZ dollar, BusinessDesk reported citing RBNZ Chief Economist Conway. (See link)
• Today the local calendar sees Q2 Retail Sales Ex-Inflation. The expected softness in retail spending reflects that high inflation and interest rate rises have squeezed households' purchasing power.