NZGBS: Slightly Cheaper, US Tsys Bull Steepen Following US CPI Data

In local morning trade, NZGBs are slightly cheaper after US tsys bull steepened, with yields 1-5bp lower. Market participants parsed the latest CPI data with details, bolstering the case for a pause at next week’s Fed policy meeting and keeping the door open to an increase in November.

• Headline CPI rose 3.7% on an annualised basis, up from 3.2% in July and the above consensus forecast of 3.6%. The increase was primarily driven by a 10.6% jump in gasoline prices. On a monthly basis, the core reading of +0.3% m/m was above the +0.2% consensus estimate.
• The AFR reports that Former Treasury Secretary Summers warned against excessive optimism about the US being able to quell inflation without an economic downturn. There’s about a one-in-three chance for each of three scenarios, Summers said: a soft landing, a “no landing, with inflation never really getting below 3 per cent”, and a harder landing.
• Swap rates are 1bp higher across the curve.
• RBNZ dated OIS pricing is little changed.
• Today the local calendar is empty.
• Today the NZ Treasury plans to sell NZ$200mn of the 0.50% May-26 bond, NZ$200mn of the 1.50% May-31 bond and NZ$100mn of the 1.75% May-41 bond.