MNI China Daily Summary: Friday, October 11

MNI: GERMANY SEP FINAL HICP -0.1% M/M; +1.8% Y/Y

MNI: PBOC Net Drains CNY183.8 Bln via OMO Friday

MNI: PBOC Sets Yuan Parity Lower At 7.0731 Fri; +3.03% Y/Y

CHINA PBOC CONDUCTS CNY94.2 BLN VIA 7-DAY REVERSE REPOS FRI

CHINA SETS YUAN CENTRAL PARITY AT 7.0731 FRI VS 7.0742

MNI: GERMAN SEP CPI +1.6 % Y/Y

MNI: UK AUG TRADE BALANCE GBP -0.95BN

MNI: UK AUG CONSTRUCTION OUTPUT +0.4% MM, +1% 3M3M, +0.3% YY

CANADA: Politics Week: Parliament Opens With Early Election Threats

AUSTRALIA: Albanese Lines Up Budget for May Election

AUSTRALIA: Albanese Lines Up Budget for May Election

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BONDS: NZGBS: Closed On A Weak Note, PMI & Food Prices Weigh

BONDS
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NZGBs closed on a weak note, with benchmark yields 4-6bps higher. 

  • NZGBs underperformed compared to their $-bloc counterparts, with the NZ-US and NZ-AU 10-year yield spreads widening by 4-5bps.
  • This underperformance likely stems from a combination of factors, including a rebound in the PMI, the largest annual increase in food prices since February, and continued selling pressure following yesterday's announcement of a larger-than-expected budget deficit.
  • “New Zealand's annual inflation is poised to return to the central bank's target band for the first time in nearly three years in the September quarter, but the so-called "disinflation progress" is more driven by global factors than by recent domestic monetary tightening, ANZ Research said in a Friday report.” (per MT Newswires)
  • Swap rates closed 5-6bps higher.
  • RBNZ-dated OIS pricing closed 5-14bps softer across meetings out to Apr- 2025 versus pre-RBNZ levels, despite today's 2-5bps firming. 52bps of easing is priced in for November (4.23%), with a cumulative easing of 90bps for February 2025 (3.85%) and 147bps for July 2025 (3.28%).
  • On Monday, the local calendar will see the Performance Services Index and Card Spending Total data as well as a speech by RBNZ Governor Orr on Maori Access to Capital.
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NZGBs closed on a weak note, with benchmark yields 4-6bps higher. 

  • NZGBs underperformed compared to their $-bloc counterparts, with the NZ-US and NZ-AU 10-year yield spreads widening by 4-5bps.
  • This underperformance likely stems from a combination of factors, including a rebound in the PMI, the largest annual increase in food prices since February, and continued selling pressure following yesterday's announcement of a larger-than-expected budget deficit.
  • “New Zealand's annual inflation is poised to return to the central bank's target band for the first time in nearly three years in the September quarter, but the so-called "disinflation progress" is more driven by global factors than by recent domestic monetary tightening, ANZ Research said in a Friday report.” (per MT Newswires)
  • Swap rates closed 5-6bps higher.
  • RBNZ-dated OIS pricing closed 5-14bps softer across meetings out to Apr- 2025 versus pre-RBNZ levels, despite today's 2-5bps firming. 52bps of easing is priced in for November (4.23%), with a cumulative easing of 90bps for February 2025 (3.85%) and 147bps for July 2025 (3.28%).
  • On Monday, the local calendar will see the Performance Services Index and Card Spending Total data as well as a speech by RBNZ Governor Orr on Maori Access to Capital.