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BONDS: NZGBS: Little Changed, US Tsys Extend Post-Payrolls Sell-Off

BONDS
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In local morning trade, NZGBs are slightly richer despite a cheapening by US tsys. The US 10-year yield finished 6bps higher at 4.02% - the first time back above 4.0% since August.  The 2-year yield increased 7bps to 4.0%.

  • Market participants continued to adjust to Friday's strong September jobs report and price out aggressive rate cut expectations. Fed funds futures have not only taken out risks for a 50bp cut next month but now reflect the chance of no action. The implied November contract shows -19bps in easing, with December at -44bps.
  • There was limited if any reaction to Fed speakers yesterday. MN Fed President Kashkari said risks of higher inflation are waning as he defended his 50bp rate cut decision, seeing a neutral rate at around 3%.
  • Brent crude prices extended higher and traded above US$80 per barrel with the market concerned that Israel may attack Iran’s oil infrastructure in retaliation for the missile attack last week.
  • Swap rates are 1-2bps higher.
  • RBNZ dated OIS pricing is 6-16bps firmer than Friday’s closing levels for 2025 meetings. A cumulative 90bps of easing is priced by year-end ahead of Wednesday’s RBNZ Policy Decision.
  • Today, the local calendar is empty.
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In local morning trade, NZGBs are slightly richer despite a cheapening by US tsys. The US 10-year yield finished 6bps higher at 4.02% - the first time back above 4.0% since August.  The 2-year yield increased 7bps to 4.0%.

  • Market participants continued to adjust to Friday's strong September jobs report and price out aggressive rate cut expectations. Fed funds futures have not only taken out risks for a 50bp cut next month but now reflect the chance of no action. The implied November contract shows -19bps in easing, with December at -44bps.
  • There was limited if any reaction to Fed speakers yesterday. MN Fed President Kashkari said risks of higher inflation are waning as he defended his 50bp rate cut decision, seeing a neutral rate at around 3%.
  • Brent crude prices extended higher and traded above US$80 per barrel with the market concerned that Israel may attack Iran’s oil infrastructure in retaliation for the missile attack last week.
  • Swap rates are 1-2bps higher.
  • RBNZ dated OIS pricing is 6-16bps firmer than Friday’s closing levels for 2025 meetings. A cumulative 90bps of easing is priced by year-end ahead of Wednesday’s RBNZ Policy Decision.
  • Today, the local calendar is empty.