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NZGBs Cheaper On Global Dynamics

BONDS

The major NZGB benchmarks run 3-5bp cheaper across the curve at typing, in sympathy with Thursday’s bear flattening on the U.S. Tsy curve.

  • Thursday’s broader, somewhat fluid, two-way price action was a result of hotter than expected U.S. CPI data, speculation surrounding a potential UK government U-turn re: its fiscal plan, another round of sizable BoE Gilt purchases, talk of fresh intervention in JPY and a notable rally in U.S. equities after the initial post-CPI shunt lower, facilitated by already very short positioning, further aided by the previously outlined headline flow and perhaps some buying related to technical analysis.
  • 2-Year swap rates have registered another fresh cycle high, last dealing at ~4.95%.
  • RBNZ dated OIS now prices a terminal rate of 5.00%, 5bp or so higher vs. levels seen late yesterday, aided by the spill over from the U.S. CPI print.
  • BNZ manufacturing PMI data has already crossed, with the rate of expansion in the headline reading slowing to 52.0 in Sep vs. the 54.8 seen in Aug.
  • Elsewhere, NZ FinMin Robertson has reiterated the “good fundamentals” of the domestic economy, highlighting the need to stabilise spending to curb inflation and a want to diversify trade away from China
  • China inflation and trade balance data provide Asia-Pac regional points of interest later in the session.
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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