NZGBS: Slightly Cheaper, Auckland Anniversary Day

In local morning trade, NZGBs are flat to 1bps cheaper. Volumes are however light with Auckland out for a holiday. In dealings ahead of the weekend, US tsys bear-flattened, with the 2-year yield 6bps higher at 4.35% and the 10-year yield up 2bps to 4.13%.

• It was a busy session to end the week with US tsys extending lows after PCE and Personal Spending data: PCE Deflator m/m (0.2% vs. 0.2% est, -0.1% prior), y/y (2.6% vs. 2.6% est); PCE Core Deflator m/m (0.2% vs. 0.2% est), y/y (2.9% vs. 3.0% est). Personal Spending higher than expected with up-revisions to prior: 0.7% vs. 0.5% est, prior upped to 0.4% from 0.2%; and Real Personal Spending: 0.5% vs. 0.3% est.
• US Pending Home Sales also rose a whopping 8.3% m/m vs. 2.0% est (prior down-revised to -0.3% from 0.0%), -1.0% y/y vs -4.3% est, while prior down-revised to -5.5% from -5.1%.
• Looking ahead, the focus is on the FOMC policy decision on Wednesday, followed by employment data for January on Friday.
• Swap rates are 2-3bps higher.
• RBNZ dated OIS pricing is little changed. A cumulative 92bps of easing is priced by year-end.
• NZ’s trade deficit narrowed to NZ$323mn in December from -NZ$1.25bn.