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BONDS: NZGBS: Slightly Cheaper, Trade Tensions In Focus

BONDS
BulletMarketsFixed Income Bullets

In local morning trade, NZGBs are 1bp cheaper after US tsys finished Friday with modest losses. 

  • US tsys were little changed after the economic data but edged higher in yield later in the session. 10-year notes closed 2bp higher at 4.54%.
  • Financial markets were volatile into the global close amid conflicting news on the timing for implementing tariffs on US imports. Confirmation that tariffs would be set for Canada and Mexico at 25%, and China at 10%, and begin this week, saw equities retrace earlier gains.
  • Over the weekend, Canada and Mexico have announced retaliatory tariffs on the US. In addition, China has said it will take counteractive measures and file a lawsuit with the World Trade Organisation. Trade tensions will remain in focus as markets open for the week.
  • China is much more diversified than Canada and Mexico with only 13.3% of its 2024 goods exports going to the US down from 14.8% in 2023. They were worth 2.8% of GDP in 2023. 6.9% of US exports went to China in 2024.
  • Swap rates are 1-2bps higher.
  • RBNZ dated OIS pricing is little changed. 48bps of easing is priced for February, with a cumulative 123bps by November.
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In local morning trade, NZGBs are 1bp cheaper after US tsys finished Friday with modest losses. 

  • US tsys were little changed after the economic data but edged higher in yield later in the session. 10-year notes closed 2bp higher at 4.54%.
  • Financial markets were volatile into the global close amid conflicting news on the timing for implementing tariffs on US imports. Confirmation that tariffs would be set for Canada and Mexico at 25%, and China at 10%, and begin this week, saw equities retrace earlier gains.
  • Over the weekend, Canada and Mexico have announced retaliatory tariffs on the US. In addition, China has said it will take counteractive measures and file a lawsuit with the World Trade Organisation. Trade tensions will remain in focus as markets open for the week.
  • China is much more diversified than Canada and Mexico with only 13.3% of its 2024 goods exports going to the US down from 14.8% in 2023. They were worth 2.8% of GDP in 2023. 6.9% of US exports went to China in 2024.
  • Swap rates are 1-2bps higher.
  • RBNZ dated OIS pricing is little changed. 48bps of easing is priced for February, with a cumulative 123bps by November.