NZGBS: Yields Shunt Higher After ANZ Calls 50bps Of Additional Tightening

NZGBs closed 9-14bps cheaper across benchmarks after the ANZ Bank announced that they expected the RBNZ to push the official cash rate (OCR) higher this month and in April by 50bps in total, taking the OCR to 6.0%.

• (DJ) The RBNZ warned in November that "If inflation pressures were to be stronger than anticipated, the OCR would likely need to increase further." Data since then has been a series of small but pretty consistent surprises in that direction, Zollner said. (See link)
• Unsurprisingly, the NZGB 10-year has underperformed the $-bloc today, with the NZ-US and NZ-AU yield differentials closing 4bps and 7bps wider respectively.
• Swap rates closed 8-17bps higher, with the 2s10s curve sharply flatter.
• A cumulative 61bps of easing is priced by year-end versus 69bps yesterday. However, this is measured from a terminal OCR of 5.75% versus 5.58% yesterday. The expected year-end OCR has jumped 50bps over the past week.
• Next week, the local calendar is empty on Monday, ahead of Inflation Expectations on Tuesday, and REINZ House Sales, Card Spending and Food Prices on Wednesday. The RBNZ Policy Decision is on 28 February.