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BONDS: NZGBs Open Richer, Tracking US Tsys Yields

BONDS
BulletMarketsFixed Income Bullets

NZGBs yields have fallen in early trading, following US Treasuries after the Federal Reserve’s preferred inflation gauge came in below estimates. US Tsys yields fell after PCE in November increased 0.1% from October and 2.8% from a year earlier, both levels slightly below consensus forecasts with the monthly advance the slowest since May.

  • The NZGB curve has steepened over the past week, as long-end yields underperform. 1yr-5yr tenors are trading richer over the past week, while the 30yr trades 10bps cheaper. Most of the weeks moves came following the much softer than-expected NZ GDP data with 3Q GDP coming in -1% vs an estimated -0.2%, while 2Q GDP was revised to -1.1% from -0.2%.
  • NZGB are richer this morning, with the 2yr -0.6bps at 3.673%, the 10yr is -4.2bps at 4.488%. The 3s10s curve is now at its steepest levels for the year, at 79.40.
  • Swaps are trading 1-5bps lower this morning
  • RBNZ dated OIS is holding steady to start the week with 53bps of cuts priced for the Feb meeting. There is another full cut priced at the April meeting, with a cumulative 83.5bps of cuts being priced with the market pricing in 4 cuts by May. There is a total of 122bps of cuts priced through to November 2025.
  • The NZD is the worst-performing G10 currency year-to-date, down 10.56% against the USD at 0.57. It has underperformed the BBDXY by 17.47% for the year.
  • There is nothing else on the New Zealand Calendar for the rest of the year. NZGBs yields will likely be driven by global events and US tsys yields.
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NZGBs yields have fallen in early trading, following US Treasuries after the Federal Reserve’s preferred inflation gauge came in below estimates. US Tsys yields fell after PCE in November increased 0.1% from October and 2.8% from a year earlier, both levels slightly below consensus forecasts with the monthly advance the slowest since May.

  • The NZGB curve has steepened over the past week, as long-end yields underperform. 1yr-5yr tenors are trading richer over the past week, while the 30yr trades 10bps cheaper. Most of the weeks moves came following the much softer than-expected NZ GDP data with 3Q GDP coming in -1% vs an estimated -0.2%, while 2Q GDP was revised to -1.1% from -0.2%.
  • NZGB are richer this morning, with the 2yr -0.6bps at 3.673%, the 10yr is -4.2bps at 4.488%. The 3s10s curve is now at its steepest levels for the year, at 79.40.
  • Swaps are trading 1-5bps lower this morning
  • RBNZ dated OIS is holding steady to start the week with 53bps of cuts priced for the Feb meeting. There is another full cut priced at the April meeting, with a cumulative 83.5bps of cuts being priced with the market pricing in 4 cuts by May. There is a total of 122bps of cuts priced through to November 2025.
  • The NZD is the worst-performing G10 currency year-to-date, down 10.56% against the USD at 0.57. It has underperformed the BBDXY by 17.47% for the year.
  • There is nothing else on the New Zealand Calendar for the rest of the year. NZGBs yields will likely be driven by global events and US tsys yields.