BONDS: NZGBS: Bear-Steepener But NZ-AU 10Y Diff Still Near Cycle Low
Dec-05 03:52
NZGBs closed showing a bear-steepener, with benchmark yields flat to 6bps higher.
- On a relative basis, NZGBs also had a tough day with the NZ-US and NZ-AU 10-year yield differentials 5bps wider. Nevertheless, the NZ-AU differential remains near its lowest since 2020 (see chart).
- Cash US tsys are slightly richer in today's Asia-Pac session after yesterday’s modest sell-off.
- Friday's US Calendar: Personal Income/Outlays, UofM Consumer Survey. Non-Farm payrolls are not released tomorrow, but are rescheduled for December 16.
- NZ total new lending increased to NZ$14.59 billion in October from NZ$14.29 billion in September, according to data from the RBNZ. – MTN via BBG
- Swap rates closed 3-6bps higher, with implied short-end swap spreads wider.
- RBNZ-dated OIS pricing closed slightly firmer across meetings. 1bps of easing is priced for February, while November 2026 assigns 33bps of tightening.
- Interest rate expectations across the $-bloc firmed over the past week out to June 2026, led by Australia (+15bps). Canada rose 6bps, while NZ and the US edged higher by 2bps and 3bps, respectively.
- Tomorrow, the local calendar will be empty until next Wednesday, when RBNZ Governor Breman hosts a media Q+A alongside Net Migration data.
Bloomberg Finance LP
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BONDS: NZGBS: Richer But NZ-US10Y Diff Wider
Nov-05 03:47
NZGBs closed 2-3bps richer, but with the NZ-US 10-year yield differential 2bps wider at +2bps. (see chart)
- NZ's jobless rate held steady at 5.3% in the third quarter, matching economist expectations. Employment was unchanged quarter-on-quarter, compared with a revised 0.2% fall in the previous quarter, while employment declined 0.6% year-on-year, a smaller drop than in the second quarter. The labour force participation rate was 70.3%.
- Average hourly earnings rose 0.7% from the previous quarter, and non-government wages increased 0.4% including overtime and 0.5% for ordinary time.
- Swap rates are 2-3bps lower, with the 2-year rate rejecting off the 20-day EMA.
- RBNZ dated OIS pricing is slightly softer across meetings. 26bps of easing is priced for November, with a cumulative 33bps by February 2026.
- Tomorrow, the local calendar will see the RBNZ at the Select Committee to discuss the FinStab Report, and the Government will release its 3-Month Financial Statements.
- Also tomorrow, the NZ Treasury plans to sell NZ$225mn of the 3.00% Apr-29 bond, NZ$175mn of the 4.50% May-35 bond and NZ$50mn of the 5.00% May-54 bond.
Bloomberg Finance LP
JGBS AUCTION: Poor To Mixed Demand Metrics For 10Y Auction
Nov-05 03:44
The 10-year JGB auction delivered weak to mixed results, with the low price failing to meet expectations at 100.34, according to the Bloomberg dealer poll. Moreover, the cover ratio decreased to 2.9734x from 3.3356x. However, the tail shortened to 0.13 from 0.19.
- This performance came with an outright yield around the same level as last month and approximately 5bps below the cyclical high of 1.705% set last month.
- The 2s/10s and 7s/10s yield curves were also around similar levels as last month.
- Last month’s 10-year JGB auction delivered weak results, with the low price failing to meet expectations at 100.49, according to the Bloomberg dealer poll. Moreover, the cover ratio decreased to 3.3356x from 3.9156x, and the tail lengthened to 0.19 from 0.06.
- In early afternoon Tokyo trading, the cash 10-year and JGB futures are dealing slightly weaker.
JGBS AUCTION: 10-Year JGB Auction Results
Nov-05 03:37
The Japanese Ministry of Finance (MoF) sells Y 2,064.5bn 10-Year JGBs:
- Average Yield: 1.658% (prev. 1.635%)
- Average Price: 100.35 (prev. 100.55)
- High Yield: 1.674% (prev. 1.657%)
- Low price: 100.22 (prev. 100.36)
- % Allotted At High Yield: 67.9818% (prev. 9.1993%)
- Bid/Cover: 2.9734x (prev. 3.3356x)
