NZGBS: Richer, US Tsys Stronger After CPI Data

NZGBs opened 4-5bp richer with US tsys yield lower after US CPI data details point to some inflation cooling. In April, US CPI inflation rose in line with expectations, with both headline and core ex-food and energy measures increasing by 0.4% m/m. However, the breadth of the overall price pressures eased notably back to pre-pandemic levels.

• Swap rates opened 5-6bp lower with the long-end implied swap spread tighter.
• RBNZ dated OIS opened 1-5bp softer across meetings with 23bp of tightening priced for the upcoming May 24 meeting.
• NZ Finance Minister Robertson gives his pre-budget speech saying inflation has peaked but remains too high with the Government “committed to playing our part in bringing it down, including reducing our spending as a percentage of the economy over the coming years”. The budget will have four overriding themes: cost-living support, delivering services, recovery and resilience, and fiscal sustainability.
• REINZ House Price Index falls 12% y/y but shows some tentative signs of stabilisation.
• April Food Prices are slated for today with the annual rate expected to remain firm.
• The NZ Treasury plans to sell NZ$200mn of the 0.25% 15 May 2028 bond, NZ$150mn of the 3.50% 14 April 2033 bond and NZ$50mn of the 2.75% 15 May 2051 bond.