NZGBS: Richer After Yesterday’s Holiday, US10YY Hits 5.02% But Finishes At 5.85%

In local morning trade following yesterday’s holiday, NZGBs are flat to 3bps richer after a volatile NY session for US tsys. The US 10-year yield traded in a 19bp range, breaching the 5% mark (5.019%) for the first time since 2007, before finishing 6bps lower at 4.85%. The 2-year finished 3bps richer at 5.05%.

• Bloomberg reported Bill Gross had covered short positions, while Pershing Square fund manager/CEO Bill Ackman tweeted he had covered shorts in US tsys in light of "too much risk in the world to remain short." Additionally, Reuters reported asset manager Vanguard is bullish on longer-dated US tsys after this year’s brutal selloff, betting that the Federal Reserve is at the end of its rate hiking cycle and that the economy will slow next year.
• The decline in yields provided support for equities, while the USD, gold and oil slumped.
• Geopolitics remained a focus, but the delay to a much feared Israel ground assault on Gaza provided some stability to the markets as diplomats tried to prevent a wider regional conflict.
• Swap rates are 3bp lower, with implied swap spreads narrower.
• RBNZ dated OIS pricing is little changed across meetings, with terminal OCR expectations at 5.62%.
• Today, the local calendar is empty.