OIL: Crude Down On Supply Hopes & Lower 2026 Consumption

• Gold had a modest technical bounce in Asia today, up just +0.15% at US$4,305.  
• The precious metal opened at $4,299 and traded down to a low of $4,283 before a bounce back higher.  
• The $4,300 level for now appears to be a psychological level ahead of the US opening later.  
• ST Momentum indicators like MACD show that the momentum for lower is growing, ahead of the Federal Open Market Committee (FOMC) meeting concluding tomorrow (Wednesday).  Interest rate futures have priced in an overwhelming 91% probability of a 25-basis-point rate hike (targeting a 3.75%–4.00% range) and could see gold firmly below $4,300 this week.

Fig 1:  Short term technical bounce for gold, anchors near $4,300 as MACD points to momentum for lower

source: Bloomberg Finance LP / MNI 

NZGBs closed 3-4bps cheaper, with the NZ-US 10-year yield differential 1bp lower at +3bps. The NZ-AU differential closed 3bps higher. 

• NZ's monthly card spending data are volatile and so it's unsurprising August saw payback for July's strength. However, the annual growth rate moderated and the 3-month average momentum turned negative.
• Swap rates are 2-4bps higher with the 2-year rate at 4.05%, above our previously flagged 4.00% target. The 4.00% target was based on the expected peak OCR at the time, together with the historical tendency for 2-year rates to peak around 50bps above the eventual OCR peak across previous tightening cycles. With the expected OCR peak around 3.84%, this framework points to a potential 2-year target of ~4.30%.
• RBNZ-dated OIS pricing closed firmer across meetings. 18bps of tightening is priced for October, while February 2027 and August 2027 assign 58ps and 109bps, respectively.
• Tomorrow, the local calendar will see Q3 Westpac Consumer Confidence and Q2 Current Account ahead of Q2 GDP on Thursday.  
• On Thursday, the NZ Treasury plans to sell NZ$250mn of the 2.00% May-32 bond, NZ$150mn of the 4.25% May-34 bond and NZ$50mn of the 5.00% May-54 bond.

Bloomberg Finance LP

TYZ6 is dealing at 105-26+, -0-11 from closing levels in today's Asia-Pac session.

• Cash bonds are 2-3bps cheaper in today’s Asia-Pac session after finishing Monday's session showing a modest twist-flattener. Benchmark yields closed 4bps higher to 1bp lower yesterday.
• Yesterday, the 10-year yield breached the 5% mark briefly before closing at 4.9875%. It is currently 3bps cheaper at 5.0163%.
• Rising energy costs have strengthened bets on a Federal Reserve interest-rate hike
• MNI FED: Sep 2026 FOMC Analyst Views: Split Between 1 And 2 Hike Dot For 2026 - From our updated Fed Preview Here: Consensus has capitulated in the direction of a 25bp September FOMC hike since last week's inflation data, with only a handful of analysts seeing the Fed staying on hold this week and even then mostly with weak conviction.
• MNI INTERVIEW: Lewis The Federal Reserve will likely take benchmark interest rates 75 basis point higher over the coming months before pausing, former senior Fed adviser Kurt Lewis told MNI. Lewis, who changed his own September FOMC call to a hike after the August CPI report nudged the case over the threshold, said he expects the committee to raise rates three times as long as inflation continues moderating slowly, with tariff effects fading and second-round effects from the oil shock absent.

Bloomberg Finance LP