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BONDS: NZGBS: Cheaper After Fed Powell’s Comments Push US Yields Higher

BONDS

In local morning trade, NZGBs are 3bps cheaper across benchmarks after US tsys reacted to comments from Chairman Powell at the NABE conference. 

  • The remarks were taken hawkishly by markets, when he said the central bank will lower interest rates “over time,” while emphasising that the overall US economy remains on solid footing.
  • Projected rate cut pricing receded as Powell stressed the Fed is not in a hurry to cut rates.
  • The US 2-year rate was up 8bps to 3.64%, while the 10-year was 3bps cheaper at 3.78%. The curve flattened to 14.7 bps.
  • The DXY firmed but finished off the day's high of 100.924.
  • Elsewhere, ECB Pres Lagarde gave a nod to another 25bp rate cut after saying policymakers were more confident that inflation is being controlled and will reflect on that at its October meeting.
  • Building Permits fell 5.3% m/m in August versus a revised +26.4% in July.
  • Swap rates are 2bps higher.
  • RBNZ dated OIS pricing is 1-3bps firmer for 2025 meetings. A cumulative 88bps of easing is priced by year-end.
  • Today, the local calendar will also see the NZIER Business Opinion Survey.
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In local morning trade, NZGBs are 3bps cheaper across benchmarks after US tsys reacted to comments from Chairman Powell at the NABE conference. 

  • The remarks were taken hawkishly by markets, when he said the central bank will lower interest rates “over time,” while emphasising that the overall US economy remains on solid footing.
  • Projected rate cut pricing receded as Powell stressed the Fed is not in a hurry to cut rates.
  • The US 2-year rate was up 8bps to 3.64%, while the 10-year was 3bps cheaper at 3.78%. The curve flattened to 14.7 bps.
  • The DXY firmed but finished off the day's high of 100.924.
  • Elsewhere, ECB Pres Lagarde gave a nod to another 25bp rate cut after saying policymakers were more confident that inflation is being controlled and will reflect on that at its October meeting.
  • Building Permits fell 5.3% m/m in August versus a revised +26.4% in July.
  • Swap rates are 2bps higher.
  • RBNZ dated OIS pricing is 1-3bps firmer for 2025 meetings. A cumulative 88bps of easing is priced by year-end.
  • Today, the local calendar will also see the NZIER Business Opinion Survey.