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BONDS: NZGBS: Closed On Weak Note Despite Anchored Infl. Exps.

BONDS
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NZGBs closed with a modest bear-steepening, benchmark yields 1-3bps higher, after trading 2-3bps richer early in the session.  

  • Q4 inflation expectations from the RBNZ’s business survey showed that they remain well anchored close to the mid-point of the target band. 1-year out they moderated to 2.05% from 2.4% while 2-years out they were slightly higher at 2.1% from 2.0%. 1-year out has a 90% correlation with headline inflation and 78% with core, so the RBNZ should be assured that the former will stay in the band and that the latter should return soon. Another 50bp of easing is likely at its November 27 meeting.
  • Cash US tsys are closed today for the Veterans Day holiday. Nevertheless, US tsy futures (TYZ4) are dealing heavily at 110-00, down 0-08+ from Friday's close. Fed speakers resume Tuesday in addition to the Senior Loan Officer Opinion Survey on Bank Lending Practices.
  • Swap rates closed 1-2bps higher.
  • RBNZ dated OIS pricing is flat to 4bps firmer across meetings, with July 2025 leading. A cumulative 92bps of easing is priced by February, with 53bps by year-end.
  • Tomorrow, the local calendar will see Card Spending data, ahead of Migration data on Wednesday. 
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NZGBs closed with a modest bear-steepening, benchmark yields 1-3bps higher, after trading 2-3bps richer early in the session.  

  • Q4 inflation expectations from the RBNZ’s business survey showed that they remain well anchored close to the mid-point of the target band. 1-year out they moderated to 2.05% from 2.4% while 2-years out they were slightly higher at 2.1% from 2.0%. 1-year out has a 90% correlation with headline inflation and 78% with core, so the RBNZ should be assured that the former will stay in the band and that the latter should return soon. Another 50bp of easing is likely at its November 27 meeting.
  • Cash US tsys are closed today for the Veterans Day holiday. Nevertheless, US tsy futures (TYZ4) are dealing heavily at 110-00, down 0-08+ from Friday's close. Fed speakers resume Tuesday in addition to the Senior Loan Officer Opinion Survey on Bank Lending Practices.
  • Swap rates closed 1-2bps higher.
  • RBNZ dated OIS pricing is flat to 4bps firmer across meetings, with July 2025 leading. A cumulative 92bps of easing is priced by February, with 53bps by year-end.
  • Tomorrow, the local calendar will see Card Spending data, ahead of Migration data on Wednesday.