NZGBS: Richer, Q4 CPI Tomorrow

NZGBs closed 3bps richer across benchmarks after relatively narrow trading ranges. There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined Performance of Services Index.

• Global bond trading was subdued ahead of the BoJ Policy Decision, which has just been released. As expected, the BoJ left policy and forward guidance unchanged. The afternoon session for JGB trading commenced after the local close.
• US tsys are largely unchanged on the day, with the 10-year around 1bp lower.
• Elsewhere, there was a slight risk on move post-China equity news, as China mulls a stock market rescue package. Spillover was somewhat limited for global bonds.
• Swap rates closed 1-4bps lower, with the 2s10s curve flatter.
• RBNZ dated OIS pricing closed flat to 5bps softer across meetings, with Aug-Dec leading. A cumulative 93bps of easing is priced by year-end.
• ICYMI, the RBNZ has begun consultation on activating debt-to-income restrictions and loosening loan-to-value ratios for residential lending.
• Tomorrow, the local calendar sees Q4 CPI. Bloomberg consensus expects headline CPI to rise 0.5% q/q and 4.7% y/y, lower than the RBNZ forecast at 0.8% q/q and 5.0% y/y and down from Q3’s 1.8% q/q and 5.6% y/y.