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BONDS: NZGBS: Rally Extends With US Tsys Ahead Of RBNZ Decision Tomorrow

BONDS
BulletMarketsFixed Income Bullets

In local morning trade, NZGBs have extended yesterday’s strong rally, with benchmark yields down another 3-7bps and the 2/10 curve flatter.

  • After the initial move lower in the Asian time zone in response to President-elect Trump’s selection of Scott Bessent for Treasury Secretary, US tsy yields continued to decline in the NY session. The US 10-year yield declined 13bp to 4.27% and close to levels that prevailed ahead of the election. The yield curve flattened as 2-year yields dropped 10bp to 4.27%.
  • The nomination of Bessent, who is seen as a pragmatic pick given his deep familiarity with financial markets, is expected to prioritise economic and market stability.
  • Swap rates are 2-5bps lower.
  • Today, the local calendar is empty.
  • The key focus locally this week will be the RBNZ decision tomorrow. All but one of the economists surveyed by Bloomberg are looking for at least 50bp cut. One economist is looking for a 75bp cut. Our policy team noted early last week that an ex RBNZ economist said that the central bank would consider a 75bps cut.
  • RBNZ dated OIS pricing is flat to 3bps softer across meetings. A cumulative 98bps of easing is priced by February, with 55bps priced for tomorrow’s meeting.
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In local morning trade, NZGBs have extended yesterday’s strong rally, with benchmark yields down another 3-7bps and the 2/10 curve flatter.

  • After the initial move lower in the Asian time zone in response to President-elect Trump’s selection of Scott Bessent for Treasury Secretary, US tsy yields continued to decline in the NY session. The US 10-year yield declined 13bp to 4.27% and close to levels that prevailed ahead of the election. The yield curve flattened as 2-year yields dropped 10bp to 4.27%.
  • The nomination of Bessent, who is seen as a pragmatic pick given his deep familiarity with financial markets, is expected to prioritise economic and market stability.
  • Swap rates are 2-5bps lower.
  • Today, the local calendar is empty.
  • The key focus locally this week will be the RBNZ decision tomorrow. All but one of the economists surveyed by Bloomberg are looking for at least 50bp cut. One economist is looking for a 75bp cut. Our policy team noted early last week that an ex RBNZ economist said that the central bank would consider a 75bps cut.
  • RBNZ dated OIS pricing is flat to 3bps softer across meetings. A cumulative 98bps of easing is priced by February, with 55bps priced for tomorrow’s meeting.