JGBS: Futures Down Post 2yr Debt Sale, US-JP 10yr Spread Down ~45bps This Mth
Feb-27 03:53
JGB futures have extended lower post the lunch time break. We sit at 139.31, -.41 for the March future in latest dealings. This is around session lows.
- The 2yr debt auction printed a short while ago, with softer demand metrics apparent. The bid to cover ratio slipped to 3.16 from 4.06 prior. This is the worst bid to cover ratio since end 2023. The tail yield was 0.8330%, which compares to the current benchmark of 0.82%.
- Focus will be on whether we can test sub 139.00 for the March future. From there, the Feb 19 low at 138.71 could come into play.
- US Tsys futures are holding weaker, but in the cash JGB space we are seeing slightly firmer yield gains. The 10yr JGB yield is up +4bps, to be back above 1.41%. The US 10yr is up +2bps near 4.28%. We continue to see US-JP 10yr yield differential compression, now back to +287bps. This spread was +330bps at the end of Jan.
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BONDS: NZGBS: Richer But Well Off Bests, Fin Min In Parliament Tomorrow
Jan-28 03:46
NZGBs closed 3-6bps richer, with a flatter 2/10 curve, but well off session bests. The local market was 7-8bps richer early after yesterday’s strong lead-in for US tsys. Cash US tsys are ~2bps cheaper in today’s Asia-Pac session.
- NZGBs slightly outperformed their $-bloc counterparts, with the NZ-US and NZ-AU 10-year yield differentials narrowing by 1-2bps. The NZ-US 10-year yield differential, now at -7bps, is edging closer to the cyclical low of -15bps recorded in December 2022—the lowest since late 2020.
- Swap rates closed 2-3bps lower.
- RBNZ dated OIS pricing closed 1-4bps softer across meetings, with late 2025 leading. 48bps of easing is priced for February, with a cumulative 113bps by November 2025.
- Tomorrow, Finance Min Willis speaks to the Select Committee on the Budget Policy Statement and Half-Year Economic and Fiscal Update. RBNZ Chief Economist Paul Conway will also present a speech titled: Beyond the Cycle: Growth and interest rates in the long run.
- On Thursday, the NZ Treasury plans to sell NZ$200mn of the 1.50% May-31 bond, NZ$200mn of the 4.25% May-36 bond and NZ$100mn of the 1.75% May-41 bond.
EQUITIES: HK Equities Slightly Higher, Chinese Semiconductor Stocks Struggle
Jan-28 03:35
BOJ: Japan Government Nominates Junko Koeda To BoJ Board
Jan-28 03:30
Per BBG headlines, the Japan Government has nominated Junko Koeda to the BoJ board. She will replace Seiji Adachi.
- Per the new board member's website from Waseda Univsersity: "Ms. Junko Koeda previously held positions as a chief economist at the Ministry of Finance of Japan, an assistant professor at the University of Tokyo, and a staff economist at the International Monetary Fund. She has a Ph.D. degree in economics from UCLA and a bachelor’s degree from the University of Tokyo." (See this link for more details).
