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NZGBS: Sharply Cheaper After US Tsys Bear-Steepen, Consumer Confidence Improves


In local morning trade, NZGBs are 1-10bps cheaper after US tsys bear-steepen, with yields 5-8bps higher, ahead of Fed Chair Powell’s fireside chat later today. There was a deluge of US data, none of which promoted an extension of the recent large rally.

  • Core PCE was close to expected at 0.16% m/m, while US initial jobless claims printed in line with expectations at 218k. The MNI Chicago PMI was, however, much stronger than expected.
  • The US tsy 10-year yield finished 8bps higher at 4.33%, rebounding off a multi-week low near 4.25% after Fedspeak pushed back against the market's dovish policy outlook. Fed Daly said that she is not thinking about rate cuts, and it is too early to call an end to hikes. Fed Williams noted that monetary conditions are restrictive but should remain so for some time to bring inflation back to 2%.
  • Swap rates are 6-10bps higher, with the 2s10s curve steeper and short-end implied swap spreads wider.
  • RBNZ dated OIS pricing is little changed, with terminal OCR expectations at 5.53%.
  • ANZ consumer confidence rose to 91.9 in November from 88.1 in October. This is the first time the index has been above 90 since January 2022.
  • CoreLogic residential property prices decreased 4.5% from a year earlier versus -5.7% prior.

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