NZGBSs A Little Steeper To Start, Onshore & Offshore Matters Eyed

NZGBS adjust to the COVID news flow out of China and the extension of the rally in Chinese equities in early Wednesday trade, looking to weakness in U.S. Tsys, as opposed to the bid that was witnessed in European FI markets on the back of inflation readings out of the region.

• That leaves benchmark cash NZGBs 3.5-5.5bp cheaper across the curve, with bear steepening in play. Swap rates sit 1-4bp higher on the day, still steepening, but marginally lagging the move in NZGB yields.
• RBNZ dated OIS is little changed to start the day.
• Local news flow has seen a soft round of building permits data, while the RBNZ has “launched a second consultation as part of the five-yearly review of the Monetary Policy Committee’s (MPC) Remit that guides monetary policy decisions.” The Bank noted that “this second consultation seeks feedback on the recommendations we are intending to provide to the Government about possible changes to the Remit.” When it comes to the return of inflation to target, the RBNZ has noted that “the Reserve Bank considers the Remit best supports wellbeing by leaving the time horizon undefined.”
• Looking ahead, the monthly ANZ business survey provides the highlight of the local docket during the remainder of the session. Further afield, the Australian data deluge and official PMI readings out of China will be eyed.