NZGBS: Subdued Open, US Tsys Twist Flatten Ahead Of US CPI

In early local trade, NZGBs are little changed after US tsys finished mixed following a generally narrow range. The curve twist flattened with yields 6bp higher to 4bp lower. Light session volumes with no data or Fed speak to report. Traders were on the sidelines ahead of Thursday’s US CPI release. See the MNI CPI preview here.

• Consensus puts core CPI inflation at 0.2% m/m in July in what’s likely only a minor uptick from the unrounded 0.16% m/m in June. Analysts see two conflicting (and familiar) drivers on the month: airfares (upside) and used cars (downside). Some expect the Fed’s closely watched core services ex-housing measures to firm from particularly weak flat or near flat readings in June but to still help the trend moderate.
• Swap rates are unchanged.
• RBNZ dated OIS pricing is flat to 2bp softer, with '24 meetings leading.
• Today the local calendar has no data, but the NZ Treasury plans to sell NZ$275mn of the 0.5% May-26 bond, NZ$150mn of the 2.0% May-32 bond and NZ$75mn of the 2.75% Apr-37 bond.
• The calendar is also light in Australia, with Consumer Inflation Expectations as the only release.