BONDS: NZGBS: 10yr Back Offs 4.00% Upside Test, ANZ Surveys In Focus Next Week
NZGB yields are holding higher, but are away from session best levels. The 10yr yield couldn't sustain earlier highs above 4.00% and sits back at 3.985%R in latest dealings. The 2yr has held steady at 2.52% for much of the session. Oil prices have edged lower so far today, while US cash Tsy yields are also down a touch, likely help drag NZGB yields off earlier highs. As we noted earlier NZGB 2 and 10yr yields remain sub all key EMAs, although further upside can't be ruled out in the near term. Focus for today will rest firmly with the US CPI print later. For 10yr the 10yr the 20-day EMA is near 4.08%, for the 2yr around 2.62%.
- The NZ 2/10s curve is slightly steeper, but at +146bps remains sub recent highs around +154bps. The NZ-US 10yr government bond yield differential is around flat, up from the -3-4bps region, but still struggling for meaningful upside. Our fair estimate, last around +6bps, could shift depending on how tonight's US CPI unfolds.
- Looking ahead to next week, we have jobs filled data out on Tuesday, while ANZ business and activity figures print Thursday, then ANZ consumer confidence is out on Friday. The Q3 jobs data though, due Nov 5 is likely the next major focus point from an RBNZ standpoint (next meeting on 26th of Nov).
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JGBS: Cash Bonds Mostly Slightly Richer At Lunch
At the Tokyo lunch break, JGB futures are stronger, +8 compared to settlement levels, after yesterday's holiday.
- Japan's preliminary S&P PMIs for September were below the August outcomes. Manufacturing printed at 48.4, versus 49.7 in August. The services print was 53.0, against a 53.1 prior. The composite fell to 51.1 versus 52.0 in August.
- The manufacturing print is back to lows from March of this year. We did get close to 47.0 for the index in Q1 of 2024. The detail showed output down to 47.3 from 49.8 in August. New orders were also down in the month. The US manufacturing PMI fell for Sep as well, although it remains at much higher outright levels (52.0).
- On the services side for Japan, we remain at elevated levels. There remains a decent wedge between the manufacturing and services PMIs.
- Cash US tsys are little changed in today's Asia-Pac session.
- Cash JGBs are slightly mixed across benchmarks, with yields 1.3bp lower (20-year) to 0.3bp higher (40-year). The benchmark 10-year yield is 0.9bp lower at 1.645% versus the cycle high of 1.670%.
- Swap rates are flat to 2bps lower.
MNI EXCLUSIVE: MNI Discusses BOJ's Must Haves For Further Hikes
CHINA: Bond Futures Mixed in Morning Trade
- China's major bond futures are moving in mixed trade this morning as the 10-Yr bond yield is stationary at 1.80%.
- The 10-Yr is lower by -0.03 at 107.72 and moves further below all major moving averages.
- The 2-Yr is flat at 102.35 and consolidates below all major moving averages. Above is the 20-day EMA of 102.38.
