NZGBS: Slightly Cheaper After A Subdued End To Last Week

In local morning trade, NZGBs are 1-2bps cheaper despite US tsys holding modestly richer after the bell on Friday, with US 2-year and 10-year yields declining 3-4bps.

• University of Michigan inflation expectations were a tenth stronger than expected for both 1Y and 5-10Y measures but remained in recent ranges.
• Swap rates are 2bps higher.
• RBNZ dated OIS pricing is little changed across meetings. A cumulative 79bps of easing is priced by year-end.
• The Performance Services Index rose to 44.6 in July from a revised 40.7 in June. "It’s notable the increase in the PSI does not even get the index back to the level it was during the depths of the GFC back in 2008-09”: BNZ
• This week, the local calendar will also see REINZ House Sales and Trade Balance data tomorrow and Q2 Retail Sales Ex Inflation on Friday. Also, RBNZ Deputy Hawkesby will speak tomorrow.
• NZ Treasury announces the launch of a new May 2036 nominal bond, expecting to issue at least NZ$3bn. The transaction will be capped at NZ$6bn, with an initial price guidance of 7-11bps over the May 2035 nominal bond. The issue will be priced on Aug 20. Given the timing of the launch, the Aug 22 bond auction has been cancelled.