NZGBS: Richer After US Tsys Rally Amid Risk Aversion

In local morning trade, NZGBs are flat to 3bps richer after US tsy yields declined 8-11bps across benchmarks amid rising risk aversion.

• This move in US tsys came despite the release of Q3 US GDP data, which revealed the fastest annualised growth rate in two years (+4.9% versus +4.5% estimate).
• Supporting the demand for US tsys, the Core PCE Price Index showed +2.4% q/q, below last quarter’s +3.7% and the market’s estimate of +2.5%.
• Additional factors boosting US tsys included robust demand metrics for the $38 billion 7-year auction and jobless claims data, which showed a reading of 210k (versus 207k est. and 198k prior).
• In October Consumer Confidence rose 2% m/m to 88.1, the highest level since early 2022. However, inflation expectations rose to 4.5% from 4.2%. Overall, the survey “is another mixed bag for the RBNZ - willingness to spend is low, as the RBNZ requires, but consumers’ inflation expectations are still inconsistent with the inflation target, and there hasn’t been much progress on that front in recent months'': ANZ.
• Swap rates are 1-2bps lower.
• RBNZ dated OIS pricing is little changed, with terminal OCR expectations at 5.61%.
• The local docket is empty for the remainder of today’s session.