Soft U.S. PPI Data & Missile Hitting Poland Provide Light NZGB Bid

Cash NZGBs run 3-4bp richer across the curve after softer than expected U.S. PPI data and the previously covered casualties in Poland, initially linked to a direct hit from a Russian missile, provided a bid for U.S. Tsys on Tuesday. ECB speak pointing to a slower pace of tightening after the Bank’s December meeting helped provide a bid in European FI in pre-NY trade.

• Swap spreads are a touch tighter to flat, with a fairly parallel shift observed across swap rates.
• The above mix of news flow hasn’t really weighed on RBNZ terminal rate pricing, nor on the tightening priced into the strip for next week’s meeting, with both of those measures little changed on the day.
• Wednesday’s local docket is headlined by non-resident bond holdings data.
• Headlines surrounding the fluid Russia-Poland situation will generate the bulk of the interest during Asia-Pac hours.