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BONDS: NZGBS: Outperforms $-Bloc, RBNZ Policy Decision Next Wednesday

BONDS
BulletMarketsFixed Income Bullets

NZGBs closed unchanged but at session bests ahead of the release of US Non-Farm Payrolls data later today. 

  • Outside of the previously outlined filled jobs data, there hasn't been much by way of domestic drivers to flag.
  • Cash US tsys are flat to 1bps richer in today’s Asia-Pac session after yesterday’s heavy session. All eyes will now turn to headline nonfarm payrolls where growth is seen accelerating marginally to 150k in September after the weaker-than-expected 142k in August.
  • On a relative basis, the NZGB 10-year has strongly outperformed its $-bloc counterparts, with the NZ-US and NZ-AU yield differentials 4bps and 5bps tighter respectively.
  • Growing expectations that the RBNZ will cut the OCR by 50bps at each of its two remaining policy meetings this year have assisted this outperformance. Economists point to the risk that inflation could undershoot the RBNZ’s 2% target.
  • For next Wednesday's RBNZ Policy Decision, the market is pricing in a 74% chance (44bps) of a 50bp cut, with 92bps of easing by year-end.
  • Swap rates closed flat to 2bps higher, with the 2s10s curve steeper.
  • The local calendar is empty ahead of next week’s RBNZ meeting.
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NZGBs closed unchanged but at session bests ahead of the release of US Non-Farm Payrolls data later today. 

  • Outside of the previously outlined filled jobs data, there hasn't been much by way of domestic drivers to flag.
  • Cash US tsys are flat to 1bps richer in today’s Asia-Pac session after yesterday’s heavy session. All eyes will now turn to headline nonfarm payrolls where growth is seen accelerating marginally to 150k in September after the weaker-than-expected 142k in August.
  • On a relative basis, the NZGB 10-year has strongly outperformed its $-bloc counterparts, with the NZ-US and NZ-AU yield differentials 4bps and 5bps tighter respectively.
  • Growing expectations that the RBNZ will cut the OCR by 50bps at each of its two remaining policy meetings this year have assisted this outperformance. Economists point to the risk that inflation could undershoot the RBNZ’s 2% target.
  • For next Wednesday's RBNZ Policy Decision, the market is pricing in a 74% chance (44bps) of a 50bp cut, with 92bps of easing by year-end.
  • Swap rates closed flat to 2bps higher, with the 2s10s curve steeper.
  • The local calendar is empty ahead of next week’s RBNZ meeting.