October 18, 2024 03:46 GMT
BONDS: NZGBS: Cheaper But Outperforms The $-Bloc
BONDS
NZGBs closed flat to 4bps cheaper, but 2-3bps better than its worst levels. The 2/10 curve closed steeper, with the 2-year yield sitting 7bps lower than Wednesday’s pre-CPI level. By contrast, the 10-year yield sits 3bps higher after being pressured by higher US tsy yields, following yesterday’s robust US retail sales data.
- Nevertheless, the NZGB 10-year has outperformed its $-bloc counterparts, with the NZ-US and NZ-AU yield differentials 3-4bps tighter on the day.
- Cash US Treasuries are slightly mixed in today’s Asia-Pacific session, following yesterday’s sharp bear-steepening. Friday’s data calendar is relatively light, with housing starts and building permits being the key releases.
- Swap rates closed 3-6bps higher, with implied swap spreads 2-3bps wider.
- RBNZ dated OIS pricing closed little changed for 2025 meetings today but remains 5-9bps softer compared to pre-Q3 CPI levels. The market is currently pricing 56bps of easing for the November meeting, with a cumulative 100bps expected by February and 159bps by July.
- The local calendar is empty on Monday, with Trade Balance data and a speech on Financial Markets by RBNZ Assistant Governor Silk on Tuesday. RBNZ Governor Adrian Orr will speak about monetary policy at the Peterson Institute on Thursday.
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