NZGBS: Richer With US Tsys & Post-RBA Rally In ACGBs

In local morning trade, NZGBs are 3bps richer supported by stronger US tsys and a rally in ACGBs following the RBA decision yesterday. The strength in US bonds and equities ahead of today's FOMC decision indicates a market that is relatively unconcerned about the outcome. The consensus anticipates an unchanged policy stance, with the median dot indicating three rate cuts expected this year.

• The US 2-year yield declined 5bps to 4.68% while the 10-year fell 3bps to 4.29% after yesterday's testing of YTD highs.
• There will be no cash US tsy dealings in Asia today, with Japan out for a public holiday following yesterday’s widely anticipated policy tightening from the BoJ.
• Swap rates are 3-4bps lower.
• RBNZ dated OIS pricing is flat to 3bps softer across meetings. A cumulative 59bps of easing is priced by year-end.
• NZ’s Current Account Deficit narrowed to 6.9% of GDP in the 12 months through December from a revised 7.4% in Q3.
• Westpac Consumer Confidence rose to 93.2, the highest since Q1 2022, from 88.9 in Q4. “Households are feeling a bit more upbeat about their finances, and that has given a boost to spending appetites”: Westpac.
• Tomorrow sees the release of Q4 GDP.