NZGBS: Richer Despite Mixed US Tsys on Friday After Fed Williams’ Comments

In local morning trade, NZGBs are flat to 4bps richer after US tsys finished mixed on Friday following comments from Fed officials that pushed back against the idea of imminent rate cuts.

• NY Fed Williams said “We aren’t really talking about rate cuts right now” and suggested the Fed is still focused on whether rates are sufficiently restrictive to get inflation back to its 2% target. Meanwhile, Atlanta Fed Bostic said he sees two 25bps rate cuts in the latter half of 2024. Implied Fed funds futures still reflect 19bps in easing by March, 63bps in cuts by June and 140bps for 2024.
• The US tsy 2-year yield spiked 10bps before finishing Friday dealings 5bps higher at 4.44%. The 10-year yield also jumped higher but quickly retraced to end little changed at 3.91%, just above the weekly low.
• Swap rates are 2-3bps lower, with implied short end swap spreads tighter.
• RBNZ dated OIS pricing is little changed.
• Westpac McDermott Miller consumer confidence improved in the three months through December rising from 80.2 in Q2 to 88.9, the highest level since Q1 2022.
• Also, BNZ’s performance of services index rose to 51.2 in November from a revised 49.2 in October.