NZGBS: Richer But Off Bests After RBNZ’s 2Y Inflation Expectations Rise

NZGBs closed flat to 2bp richer, but off session bests after the RBNZ’s 2-year inflation expectations printed at 2.83% in Q3 vs 2.79% in Q2. Nevertheless, the outcomes for the two-year results fall within the central bank's designated target range of 1% to 3%. This suggests that even in the event of the RBNZ increases the OCR again, the likelihood of substantial tightening remains low.

• The RBNZ's Survey of Expectations represents respondents' expectations and not the Bank's. Additionally, 1-year inflation expectations printed at 4.17% in Q3 vs 4.28% in Q2. (See link)
• US tsys have ticked away from session highs in recent dealing after official CPI from China for July was a touch firmer than forecast weighing at the margins.
• Swap rates are 1-3bp lower, with the 3s10s curve flatter.
• RBNZ dated OIS pricing closed flat to 2bp softer across meetings, with terminal OCR expectations at 5.65%.
• Total spending on debit and credit cards for the month of July declined 0.9% m/m, +4.7% y/y. Core retail spending printed -0.1% m/m, +4.9% y/y.
• Tomorrow the local calendar has no data.
• However, the NZ Treasury plans to sell NZ$275mn of the 0.5% May-26 bond, NZ$150mn of the 2.0% May-32 bond and NZ$75mn of the 2.75% Apr-37 bond.