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BONDS: NZGBS: Closed Sharply Cheaper As Trump Trade Weighs On US Tsys

BONDS
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NZGBs closed on a heavy note, with benchmark yields 11-12bps higher. 

  • Q3 labour market data showed that the weak economy is weighing on jobs with employment falling 0.5% q/q and Q2 revised down to +0.2% q/q, weaker than expected, leaving annual growth down 0.4%.
  • Wage growth is slowing as the labour market softens. Private wages rose 0.6% q/q after 0.9% in Q2, the slowest quarterly pace since Q1 2021, which should reassure the RBNZ that the labour market is now helping with the process of disinflation.
  • Nevertheless, the key focus today is the unfolding U.S. Election, with results coming in steadily. Decision Desk HQ still has election odds firmly in favour of Trump, close to 69%.
  • Trump-related trades continue to gain ground. US equity futures are up ~1.0% for Eminis. US yields are up 12-19bps across the curve.
  • Swap rates closed 13-14bps higher.
  • RBNZ dated OIS pricing closed 4-6bps across meetings. A cumulative 92bps of easing is priced by February, with 53bps by year-end.
  • Tomorrow, the local calendar will see RBNZ officials in front of parliament's finance select committee to discuss the Financial Stability Report.
  • Tomorrow, the NZ Treasury also plans to sell NZ$200mn of the 0.25% May-28 bond, NZ$250mn of the 4.50% May-35 bond and NZ$50mn of the 5.0% May-54 bond.
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NZGBs closed on a heavy note, with benchmark yields 11-12bps higher. 

  • Q3 labour market data showed that the weak economy is weighing on jobs with employment falling 0.5% q/q and Q2 revised down to +0.2% q/q, weaker than expected, leaving annual growth down 0.4%.
  • Wage growth is slowing as the labour market softens. Private wages rose 0.6% q/q after 0.9% in Q2, the slowest quarterly pace since Q1 2021, which should reassure the RBNZ that the labour market is now helping with the process of disinflation.
  • Nevertheless, the key focus today is the unfolding U.S. Election, with results coming in steadily. Decision Desk HQ still has election odds firmly in favour of Trump, close to 69%.
  • Trump-related trades continue to gain ground. US equity futures are up ~1.0% for Eminis. US yields are up 12-19bps across the curve.
  • Swap rates closed 13-14bps higher.
  • RBNZ dated OIS pricing closed 4-6bps across meetings. A cumulative 92bps of easing is priced by February, with 53bps by year-end.
  • Tomorrow, the local calendar will see RBNZ officials in front of parliament's finance select committee to discuss the Financial Stability Report.
  • Tomorrow, the NZ Treasury also plans to sell NZ$200mn of the 0.25% May-28 bond, NZ$250mn of the 4.50% May-35 bond and NZ$50mn of the 5.0% May-54 bond.