BONDS: NZGB Yields Hold Weaker Bias, Despite Q3 GDP Beat, Recent Ranges Holding
NZGB yields are holding lower, despite the earlier Q3 NZ GDP beat. We are around 1-2.5bps lower across the benchmarks, led by the back end. The 2yr last near 2.71% (off a little over 1bps), while the 10yr is close to 4.42%, (off around 2.5bps). These moves leave us still within recent ranges, with Dec lows for the 2yr just under 2.70%, while the 10yr is comfortably above levels from the start of the month (near 4.25%). The lead for NZGB yields has been negative from softer US Tsy yields and lower Aussie bond yields as well so far today.
- Earlier we had Q3 GDP, which rose 1.1%q/q (against a market forecast of 0.9% and the RBNZ projection of 0.4%). Y/Y growth also improved to 1.3%, from a revised -1.1%y/y Q2 fall. The downside Q2 revisions, likely tempered the market reaction today, with the RBNZ still likely to be mindful of the low base growth is coming from. Q3 consumption also only rose modestly.
- The 2yr swap rate is holding 2bps lower, last just under 2.74%, but still largely range bound.
- Market pricing in terms of the RBNZ outlook, has little easing risks for the first part of next year, while a full hike is priced by the Oct meeting.
- Note tomorrow, we get Dec ANZ consumer confidence figures, Nov trade data, as well as ANZ business confidence figures.
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JPY: Asia-Pac: USD/JPY - Consolidates Gains Above 155.00
The USD/JPY range today has been 155.11 - 155.38 in the Asia-Pac session, it is currently trading around 155.20, -0.05%. The move lower in risk did not bring the usual bout of Yen buying as its safe haven status begins to be questioned. USD/JPY I suspect will remain well supported on dips as the market remains wary of the new leadership policies together with a reticence to hike rates. I will be watching today to see if the pair can build on its move above 155.00 and regain its momentum higher, look for dips in the Asian session back toward 144.70-144.90 to be supported on dips initially. A sustained move above here and the market will turn its focus back toward 160, much to the displeasure of the MOF/BOJ.
- "Japanese Prime Minister Sanae Takaichi is set to meet with Bank of Japan Governor Kazuo Ueda on Tuesday as she mulls support for an economy that shrank over the summer. The two will meet at 3:30 p.m. in Tokyo, according to the prime minister's office. The meeting comes after a report showed the Japanese economy contracted in the three months through September on a US tariff-linked slump in exports and a sharp drop in property buying." - BBG
- MacroEdge reporting on X that, "Japanese 20Y hits highest level since July 1999 as Prime Minister doubles down on printing."
- “JAPAN FINMIN KATAYAMA: RECENTLY SEEING ONE-SIDED, RAPID MOVES, ALARMED OVER FX MOVES. WILL THOROUGHLY MONITOR FOR EXCESSIVE FLUCTUATIONS AND DISORDERLY MOVEMENTS IN FOREX MARKET, WITH HIGH SENSE OF URGENCY - RTRS"
- Options : Close significant option expiries for NY cut, based on DTCC data: 155.50($527m). Upcoming Close Strikes : 155.00($1.34b Nov 20), 150.00{$1.3b Nov 20) - BBG.
- The USD/JPY Average True Range(ATR) for the last 10 Trading days: 99 Points
Fig 1 : USD/JPY Spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
AUD: Asia-Pac: AUD/USD Drifts Lower As Risk-Off Sentiment Grows
The AUD/USD has had a range today of 0.6477 - 0.6499 in the Asia- Pac session, it is currently trading around 0.6480, -0.25%. The AUD/USD has drifted lower in our session being led by the move lower in risk, driven predominantly by the collapse in Crypto. Bitcoin and Crypto continue to lead this leg lower as leverage is being squeezed, Bitcoin below the pivotal $90k area could add to the current market headwinds. The AUD/USD is testing below 0.6500 this morning, some good support back toward 0.6440-0.6460 which has been pretty solid the last couple of months, then 0.6350 below that. It would need this move lower in risk to accelerate and become something more significant to challenge down there I would think.
- MNI AU - RBA: 2-Way Risks, How They Develop Likely To Determine If Hold Prolonged. The November meeting minutes reiterated that the RBA’s central scenario is “in balance” with risks to both the downside and upside. How these risks will develop is likely to determine whether monetary policy stays on hold or rates are cut further and while it is “not yet possible to be confident” about which scenario will materialise, the Board will “remain cautious and data dependent”. With core inflation above target and ongoing signs of a recovery in demand, policy is likely to be on hold in December and into early 2026, depending on the data.
- Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6400(AUD913m), 0.6600 (AUD729m). Upcoming Close Strikes : 0.6550(AUD2.28b Nov 21) - BBG
- The AUD/USD Average True Range for the last 10 Trading days: 47 Points
Fig 1: AUD/USD spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
BONDS: NZGBS: May-36 Yield Finishes At Low After Tap
NZGBs closed showing a twist-flattener, with benchmark yields 1bp higher to 3bps lower.
- NZGBs held by international investors increased to 60.3% in October from 59.6% in September.
- RBNZ Business Expectations Survey for Q4 showed the weighted mean 1-year ahead inflation expectation falling to 2.42% from 2.53% in Q4. 2-year declines to 2.39% from 2.64% - BBG
- NZ Treasury issued NZ$6bn of May 2036 nominal NZGB after a syndicated tap. The issue was capped at NZ$6bn, with a total book size at final price guidance at NZ$24.8bn. It was priced at 12bps over the May 2035 nominal bond to yield 4.34%. JLM: ANZ Bank New Zealand, JPMorgan Securities Australia, UBS AG, Australia Branch and Westpac.
- Inflation-adjusted New Zealand existing home sales average price NSA fell 4.2% in October from the same period last year, according to Bloomberg calculations using official data.
- Swap rates closed little changed.
- RBNZ dated OIS pricing closed little changed across meetings. 25bps of easing is priced for November, with a cumulative 33bps by February 2026.
- Tomorrow, the local calendar will see PPI data.
Bloomberg Finance LP
