Cheaper But Well Above Worst Levels, NZ CPI Eyed

ACGBs (YM -2.0 & XM -5.5) are weaker but well above Sydney session cheaps after rebounding from a mid-session slump. In the absence of market-moving data, the local market largely swung with offshore developments. That said, a relatively poor demand showing (cover ratio below 3.0x) at today’s Nov-33 ACGB auction did appear to add to lunch-time weakness.

• Offshore, there has been an extension of overnight weakness in US tsys in today’s Asia-Pac session, although there has been little follow-through on early selling. US tsys are flat to 1bp cheaper across benchmarks.
• There was also some spillover selling from NZGBs following the release of Q4 CPI data. NZGB benchmarks were as much as 4bps cheaper in post-CPI dealings, but that was pared to around 2bps following the release of the RBNZ’s core CPI measures.
• Cash ACGBs are 1-4bps cheaper, with the AU-US 10-year yield differential 2bps wider at +12bps.
• Swap rates are 1-3bps higher, with the 3s10s curve steeper.
• The bills strip is cheaper, with pricing -1 to -3.
• RBA-dated OIS pricing is 1-3bps softer for meetings beyond May. A cumulative 38bps of easing is priced by year-end.
• ICYMI, QTC launched a new 4.75% 2 February 2034 A$ fixed rate green bond. Transaction expected to price tomorrow.
• Tomorrow, the local calendar is empty.