NZGBS: Only Slightly Richer Despite Strong Rally In US Tsys

In local morning trade, NZGBs are flat to 2bps richer after US tsys extended the recent rally, led by the 2-year. US tsy yields finished 6-10bps lower. This upward movement was underpinned by favourable market data. Softer European CPI inflation data, coupled with a "Goldilocks"-esque adjustment to Q3 US GDP, contributed to a 6bp drop in the US tsy 10-year yield to 4.26%.

• Growing Fed rate cut bets deepened thanks to the lack of pushback from most Fed officials. Bostic sees evidence that tighter monetary policy is biting harder into economic activity and Mester (’24 voter retiring in June) reiterated she sees Fed policy on a good footing. The Beige Book then went on to show moderation compared to the mid-October update across output, pricing and labour markets.
• Swap rates are 1-3bps lower, with the 2s10s curve steeper.
• RBNZ dated OIS pricing is little changed across meetings, with terminal OCR expectations at 5.53% following yesterday’s hawkish hold from the RBNZ.
• Building approvals rise 8.7% m/m in October versus -4.7% prior. The local calendar sees ANZ Business Confidence later today.
• Today, the NZ Treasury plans to sell NZ$200mn of the 4.5% May-30 bond, NZ$250mn of the 2.0% May-32 bond and NZ$50mn of the 2.75% May-51 bond.