NZGBS: Open Little Changed, US Core CPI As Expected

NZGBs opened flat to 1bp richer with US Tsys moderately stronger after a volatile NY session. Headline CPI moderated more than expected, but core inflation proved to be more resilient (unchanged at 5.6% Y/Y, as expected). The US Tsy 2-year yield spiked 19bp lower on the headline result only to see much of those gains unwound by the close (6bp lower). Later in the session, FOMC Minutes for the March meeting showed that Fed officials debated a temporary pause to interest rate hikes as the banking sector raged but unanimously decided inflation pressures were sufficiently worrisome to warrant a 25bp hike.

• Ahead of today’s NZGB supply, the 2/10 cash curve opens little changed, holding yesterday’s 5bp steepening. The NZ Treasury plans to sell NZ$200mn of the 0.25% 15 May 2028 bond, NZ$150mn of the 3.5% 14 April 2033 bond and NZ$50mn of the 2.75% 15 May 2051 bond.
• Swap rates are flat to 1bp lower with the 2s10s curve 1bp flatter.
• RBNZ dated OIS is little changed with 20bp of tightening priced for May.
• The local calendar is light today ahead of Manufacturing PMI and Net Migration tomorrow.
• Across the Tasman, Australia is scheduled to release its March Employment Report with BBG consensus expecting +20k.