NZGBS: Cheaper AS Global Bonds Push To Fresh Cycle Highs

In local morning trade, NZGBs are 5-8bps cheaper after US tsy yields across maturities were pushed to fresh cycle highs. The 30-year yield finished +13bps to 4.652% after hitting 4.67%, the highest since 2011. The 10-year yield reached a high of 4.546% before finishing 10bps higher at 4.533%. The 2-year was a modest 2bp higher at 5.12% versus its cycle high of 5.20% set last week.

• The higher-for-longer stance from the Fed and most major central banks has pressured global bond markets. The 10-year bund also closed at a cycle high of 2.80%. Fears over sustained inflationary pressures due to a US resilient economy and higher oil prices weighed. A deluge of supply is adding to the rise in rates too. Moody's also noted that a government shutdown, which is possible at the end of the month, would be a "negative" for ratings.
• Swap rates are 5-8bps higher, with the 2s10s curve steeper.
• RBNZ dated OIS pricing is little changed across meetings, with terminal OCR expectations at 5.76%.
• NZ’s heavy traffic index rose 6.2% m/m in August, according to ANZ Bank. The rebound after falls in June and July means the three-month average hasn’t declined significantly.
• The local calendar is light until ANZ Business Confidence on Thursday.