NZGBS: Subdued Open Ahead of Heavy Antipodean Calendar

A subdued open for NZGBs despite the stronger lead from U.S. Tsys which largely held the gains from weaker Durables New Orders into the close of NY trading. Tsys lost some of the upside momentum when Fed Governor Jefferson joined the chorus of hawkish Fed-speaker stating that services inflation was likely to slow, but the trend in core services excluding housing is “uncertain”.

• Cash NZGBs and swaps were flat to 1bp stronger at the open with the 2/10 curves unchanged.
• The NZ/US cash yield differential was 1bp wider at 71.5bp.
• RBNZ dated OIS holds at yesterday’s close across meetings with terminal OCR pricing (5.49%) now consistent with the RBNZ’s projection path peak of 5.50%. April meeting pricing is at 39bp of tightening.
• The local calendar includes ANZ’s Business Outlook Survey (ANZBO) today, followed by CoreLogic House Prices for February and January’s read on Building Permits tomorrow. The ANZBO will provide the first read on corporate sentiment in the wake of recent extreme weather events. In Australia, we receive monthly Retail Sales and Private Sector Credit data for January, and the remaining quarterly partials ahead of Q4 GDP on Wednesday. The market will likely be attuned to the strength of the bounce back in retail sales data after the 3.9% decline in December.