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BONDS: NZGBS: Richer With US Tsys Following FOMC Decision & Presser

BONDS
BulletMarketsFixed Income Bullets

In local morning trade, NZGBs are 2-4bps firmer, tracking gains in US tsys, which rebounded from Wednesday’s post-election lows. This move followed the FOMC’s anticipated 25bp rate cut and a dovish press conference from Fed Chairman Powell.

  • Cash US tsys finished 7-13bps richer, with the belly of the curve outperforming.
  • The FOMC gave away few new signals about the future rate path at the November meeting. Chair Powell once again emphasised data dependence in setting policy while shrugging off recent volatility in inflation and employment readings.
  • Accordingly, rate markets were slightly changed, with terminal Fed funds rates at 3.72% (roughly 86bp of further cuts to come), roughly the same as pre-decision.
  • However, December cut pricing ticked up slightly, as Powell did little to suggest they were going to deviate from the plan set in September. While the Fed's goal is to get rates into a neutral stance, "nothing in the economic data suggests that the committee needs to be in a hurry to get there."
  • Swap rates are 2-4bps lower with the 2s10s curve flatter.
  • RBNZ dated OIS pricing shows a cumulative 92bps of easing is priced by February, with 54bps by year-end.
  • The local data calendar is empty until next week's 2-year inflation expectations print.
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In local morning trade, NZGBs are 2-4bps firmer, tracking gains in US tsys, which rebounded from Wednesday’s post-election lows. This move followed the FOMC’s anticipated 25bp rate cut and a dovish press conference from Fed Chairman Powell.

  • Cash US tsys finished 7-13bps richer, with the belly of the curve outperforming.
  • The FOMC gave away few new signals about the future rate path at the November meeting. Chair Powell once again emphasised data dependence in setting policy while shrugging off recent volatility in inflation and employment readings.
  • Accordingly, rate markets were slightly changed, with terminal Fed funds rates at 3.72% (roughly 86bp of further cuts to come), roughly the same as pre-decision.
  • However, December cut pricing ticked up slightly, as Powell did little to suggest they were going to deviate from the plan set in September. While the Fed's goal is to get rates into a neutral stance, "nothing in the economic data suggests that the committee needs to be in a hurry to get there."
  • Swap rates are 2-4bps lower with the 2s10s curve flatter.
  • RBNZ dated OIS pricing shows a cumulative 92bps of easing is priced by February, with 54bps by year-end.
  • The local data calendar is empty until next week's 2-year inflation expectations print.