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Yields Off Highs, Retail Sales Volumes Tomorrow, RBNZ Next Week

NEW ZEALAND

NZ yields finished away from best levels, albeit more so at the back end. The 10yr yield finished near 4.775%, down from intra-session highs above 4.79%. The 2yr year yield was stickier, holding close to 4.92% (earlier highs were above 4.93%). This left the 2/10s curve slightly flatter at around -14bps.

  • NZ bonds saw support from a firmer US Tsy backdrop. TYH4 is +03 firmer versus opening levels. Outside of buoyant Nvidia earnings news, macro news flow has been light.
  • In the swap space, the 2yr sits off earlier highs, last near 5.11%, while the 10yr rate is down around 2.5bps to 4.59%. Both benchmarks have followed the equivalent NZGB yield trajectory to large extent.
  • We had early data on Jan trade, with a wider deficit relative to Dec, but this didn't impact sentiment. Tomorrow we have Q4 retail sales volumes.
  • Next Wednesday the RBNZ outcome is due. OIS pricing has a rough 30% pricing of a hike, with rate cuts expected towards the end of the year.

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