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MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
BONDS
NZ Treasury comments on the RBNZ policy outlook sparked a short-end led sell-off in NZGBs. By the close, 2-year yields were 10bp higher with the 2/10 cash curve 6bp more inverted.
- Swaps also delivered a 4bp flattening of the curve with the 2-year rate 7bp higher.
- Comments from the NZ Government over the past 24 hours have (1) pushed back against a ‘no hike’ option for tomorrow and (2) suggested that the RBNZ may have to keep rates ‘higher for longer’ given that the inflationary impact of the post-Cyclone rebuild.
- RBNZ-dated OIS pricing for tomorrow’s meeting closed unchanged at ~46bp, after being firmer during the session. Pricing for later meetings however bore the brunt of today's paying. Terminal OCR expectations moved to just below 5.40% and November pricing moved as much as 17bp higher. At yesterday's close the market had priced in 20bp of cuts by November. That has now been scaled back to ~15bp.
Fig 1: RBNZ-Dated OIS – Pre and Post NZ Treasury’s ‘Higher For Longer’ Comments
Source: MNI - Market News/Bloomberg
- Elsewhere, Q4 PPI managed to print at a slower Q/Q rate.
- Looking ahead, the resumption of U.S. cash Tsy trading after yesterday's holiday may provide fresh impetus, but the Antipodean markets will remain focused on Wednesday’s release of Australia’s Q4 WPI and the RBNZ decision.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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