NZGBS: Slightly Cheaper, US Tsys Pressured By Supply & Risk On Sentiment

In local morning trade, NZGBs are flat to 2bps cheaper after US tsys were pressured through the NY session, with yields finishing 3-6bps higher on supply concerns and an improvement in risk appetite.

• The US Treasury expects to borrow $776bn in Q4 and an additional $816bn in Q1 2024. Both estimates would represent records for each respective quarter. However, the Q4 estimate was $76bn less than previously announced in July, due to projections of higher receipts.
• A bounce in risk appetite and better than 1% gains on Wall Street further weighed on US tsys, along with a rise in corporate issuance.
• Nikkei headlines that posited the BOJ will consider tweaking the yield curve control framework at today’s policy meeting extended the selloff on beliefs higher JGB rates could pull demand from US tsys.
• Swap rates are 2-4bps higher, with the 2s10s curve steeper and implied swap spreads wider.
• RBNZ dated OIS pricing is little changed, with terminal OCR expectations at 5.61%.
• Building approvals fell 4.7% m/m in September after a revised -7% in August. Annual approvals fall 20% y/y.
• ANZ Business Confidence will be released later today.