NZGBS: Slight Twist-Flattening, Awaiting US Payroll Data

At the local close, NZGBs exhibited a slight twist-flattening of the curve, with yields 1bp higher to 2bps lower. With the domestic calendar empty today and cash tsys closed in Asia due to the observance of a national holiday in Japan, the local market largely drifted through the session ahead on US Non-Farm Payrolls later today.

• US tsy futures are dealing at 107-16+, +0-01 compared to the NY close. US equity futures sit lower as Apple’s Q4 sales outlook continues to weigh.
• Swap rates closed 1bp higher to 2bps lower, with the 2s10s curve flatter and implied swap spreads wider.
• RBNZ dated OIS pricing is little changed, with terminal OCR expectations at 5.56% (+6bps by Feb’24).
• In the final election result, the NZ Nationals need the support of 2 other parties to form government after losing 2 seats.
• Looking ahead to next week the docket is relatively light with Q4 Inflation Expectations the highlight. We also have October Mfg PMI and Card Spending.
• Next Thursday, the NZ Treasury plans to sell NZ$175mn of the 4.5% May-30 bond, NZ$225mn of the 2.0% May-32 bond and NZ$100mn of the 2.75% Apr-37 bond.