NZGBS: Curve Twist Steepens As Long End US Tsy Yields Push Higher

NZGBs experienced a noteworthy 12bp twist-steepening of the yield curve. Specifically, the 2-year benchmark closed 1bp richer, contrasting with the 11bp cheapening in the 10-year.

• With no significant domestic events today, the local market's primary focus was the continuation of the overnight weakness in US tsys during the Asia-Pacific session. During yesterday’s NY session, US tsys finished with yields 1 to 8bps higher, with the belly of the yield curve displaying weaker performance. In the ongoing Asia-Pacific session, cash US tsys are 1 to 4bps cheaper, contributing to a steeper yield curve.
• Technical issues within the YieldBroker tendering system prompted the NZ Debt Management to postpone today's bond auction. This development also helped direct focus to international markets. The rescheduled auction is now set to occur between 2:00 p.m. and 2:30 p.m. local time tomorrow.
• Swap rates closed 4-12bps higher, with the 2s10s curve steeper and implied swap spreads sharply wider.
• RBNZ dated OIS pricing closed unchanged across meetings out to Apr’24 and 1-2bps firmer beyond. Nevertheless, pricing remains 4-7bps softer than pre-CPI levels seen earlier in the week. Terminal OCR expectations were steady at 5.65%.
• Tomorrow, the local calendar will see the release of Trade Balance data for September.