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Cheaper With US Tsys After Powell’s Comments, Sticky NZ Inflation

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ACGBs (YM -4.0 & XM -4.0) are cheaper after global bond markets remained under pressure amid ongoing repricing of the FOMC policy trajectory. The market is pricing less than 40bps of Fed rate cuts for this year.

  • Fed Chair Powell’s "lack of further progress on inflation" comment added to the sell-off. US tsys yields made fresh YTD highs. The 2-year yield cheapened 7bps to test 5.0%. The 10-year rate also finished 7bps higher at 4.67% after reaching 4.694%.
  • The DXY was firmer on Powell's comments amid expectations the ECB, the BoC, and possibly the BoE could cut before the Fed. USD-JPY also edged up on expectations the BoJ will remain accommodative.
  • Sharply higher NZGB yields following Q1 CPI data may also be providing some negative spillover. Services and Non-Tradeable inflation are proving sticky suggesting a prolonged hold.
  • Cash ACGBs are 3-4bps cheaper, with the AU-US 10-year yield differential at -30bps.
  • Swap rates are 4bps higher.
  • The bills strip has bear-steepened, with pricing -1 to -5.
  • RBA-dated OIS pricing is 3-5bps firmer for 2025 meetings. A cumulative 16bps of easing is priced by year-end.
  • Today, the local calendar sees the Westpac Leading Index, ahead of the Employment Report for March tomorrow.
  • Today, the AOFM plans to sell A$800mn of 3% Nov-33 bond.
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ACGBs (YM -4.0 & XM -4.0) are cheaper after global bond markets remained under pressure amid ongoing repricing of the FOMC policy trajectory. The market is pricing less than 40bps of Fed rate cuts for this year.

  • Fed Chair Powell’s "lack of further progress on inflation" comment added to the sell-off. US tsys yields made fresh YTD highs. The 2-year yield cheapened 7bps to test 5.0%. The 10-year rate also finished 7bps higher at 4.67% after reaching 4.694%.
  • The DXY was firmer on Powell's comments amid expectations the ECB, the BoC, and possibly the BoE could cut before the Fed. USD-JPY also edged up on expectations the BoJ will remain accommodative.
  • Sharply higher NZGB yields following Q1 CPI data may also be providing some negative spillover. Services and Non-Tradeable inflation are proving sticky suggesting a prolonged hold.
  • Cash ACGBs are 3-4bps cheaper, with the AU-US 10-year yield differential at -30bps.
  • Swap rates are 4bps higher.
  • The bills strip has bear-steepened, with pricing -1 to -5.
  • RBA-dated OIS pricing is 3-5bps firmer for 2025 meetings. A cumulative 16bps of easing is priced by year-end.
  • Today, the local calendar sees the Westpac Leading Index, ahead of the Employment Report for March tomorrow.
  • Today, the AOFM plans to sell A$800mn of 3% Nov-33 bond.