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of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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Today, the NZGB 10-year yield has increased by 4bp. However, NZGBs have still demonstrated stronger performance compared to ACGBs, as evidenced by the 2bp widening of the AU/NZ 10-year yield differential. This follows a widening of 5bp observed yesterday.
- At -42bp, the AU/NZ 10-year yield differential is currently standing at a five-month high.
- In early March, the AU-NZ 10-year yield differential narrowed to -100bp, its lowest level since the late 1990s on the back of a worse-than-expected deterioration in NZ’s current account deficit and the resultant S&P bond ratings comments.
- The recent movement in the market can be attributed to the diverging expected rate paths for the RBNZ and the RBA. The market is adjusting its pricing to reflect the anticipation of the RBA catching up to the rate hikes that have already been implemented by the RBNZ.
Figure 1: AU/NZ 10-Year Yield Differential Vs. 1Y3M Swap Differential
Source: MNI – Market News / Bloomberg
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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