NZGBS: Richer, US Tsys Twist-Flatten, Food Prices Fall

In local morning trade, NZGBs are 5bps richer as global markets continue to grapple with the impact of the war raging between Israel and Hamas. Expectations that the FOMC, and most likely the ECB and BoE too, were at peak rates continued to keep a bid in bonds.

• The US Tsy curve twist-flattened, pivoting at the 5s, with yields 1bp higher to 14bps lower across benchmarks.
• Swap rates are 4-7bps lower, with the 2s10s curve flatter.
• RBNZ dated OIS pricing is 1-3bps softer across meetings.
• In its annual report, RBNZ Governor Adrian Orr noted that the increase in OCR to 5.5% was the most rapid increase in the Bank’s history and that “the effects of this are flowing through as anticipated to our economy”. He added that the OCR “will need to stay at restrictive levels for the foreseeable future to ensure annual consumer price inflation returns to our 1-3% target range, while supporting maximum sustainable employment.”
• The REINZ House Prices rose 0.7% m/m in September, the fourth straight monthly gain.
• Food prices fell 0.4% m/min in September.
• Today, the NZ Treasury plans to sell NZ$200mn of the 4.5% May-30 bond, NZ$225mn of the 2.0% May-32 bond and NZ$75mn of the 2.75% May-51 bond.