NZGBS: Closed With A Twist-Steepening, Q3 Employment Data Tomorrow

NZGBs closed with a twist-steepening of the curve. Interestingly, the 2-year benchmark concluded at its highest level of the session, while the 10-year benchmark ended the day at its lowest point. It's worth noting that the BOJ's decision was released just three minutes before the local market's closing, so there is potential for some market adjustments to become evident in early trade tomorrow.

• Overall, the BOJ decision aligned with general market expectations. It involved a minor adjustment in the wording to provide room for flexibility regarding the upper limit for long-term yields while maintaining its accommodative policy stance.
• US tsys initially reacted positively to the BOJ decision, although like JGBs, there has been a paring of the initial gains. Cash US tsys are 1-3bps richer in Asia-Pac trade.
• Swap rates closed flat to 6bps higher, with the 2s10s curve steeper.
• RBNZ dated OIS pricing closed little changed.
• Business confidence rose to 23.4 in October from 1.5. Inflation expectations were little changed at 4.94%. “Inflation pressures are gradually waning but there hasn’t been a great deal of progress in the last couple of months. It’s still a very long way back to the inflation target”: ANZ
• Tomorrow, the local calendar sees CoreLogic House Prices and Q3 Employment data. The RBNZ will also publish its Financial Stability Report.