NZGBS: Follow ACGBs In Mid-Session Reversal

NZGBs failed to hold the morning session’s U.S. Tsy induced selling pressure, delivering a 4bp reversal across the curve in line with their trans-Tasman counterparts. At the close, NZGB yields were 3.5bp higher for the 2-year benchmark and 1bp higher for the 10-year with a 2bp further inversion of the 2/10 bond curve.

• The swings in NZ swaps were even larger with the 2-year swap rate higher by as much as 10bp in morning trade before reversing to close up 5bp. 10-year swap rate rose 4.5bp in early trade but managed to close 3.5bp lower with the curve 8.5bp more inverted.
• RBNZ-dated OIS reversed early session upward pressure to close basically unchanged with the amount of tightening priced for this month’s meeting at 56bp and terminal OCR pricing sitting around 5.40%.
• There wasn't much in the way of domestic matters to shape price action.
• Looking ahead, the market is likely to find its guidance from abroad with January prints for UK CPI and U.S. retail sales the most noteworthy global data releases on Wednesday, while Australian labour market data may provide some trans-Tasman impetus on Thursday. The weekly NZDM supply will come in the form of NZGB-28, -33 & -37.