BONDS: NZGBS: Bull-Flattener To Start The Week
NZGBs closed flat to 4bps richer, with a flatter 2/10 curve, after a data-light local session. The next key release is Mfg Activity Volume on Wednesday. Across the ditch, the RBA will deliver its policy decision tomorrow.
- New Zealand government is pushing ahead with moves to increase banking competition by boosting Kiwibank and taking steps to ensure the Reserve Bank places greater importance on competition in the sector, Finance Minister Nicola Willis says. (per BBG)
- “New Zealand is often seen as the little brother against the Aussies. We’re trying to give that little brother a little bit more muscle to get a fairer deal for Kiwis”: Willis
- Cash US tsys are flat to 1bp richer in today’s Asia-Pac session after Friday’s modest post-payrolls gains. As a reminder, the Federal Reserve entered its self-imposed blackout at midnight Friday through December 19.
- Swap rates closed 2-4bps lower.
- RBNZ dated OIS pricing closed flat to 2bps softer across meetings. 44bps of easing is priced for February, with a cumulative 105bps by November 2025.
- On Thursday, the NZ Treasury plans to sell NZ$250mn of the 0.25% May-28 bond, NZ$225mn of the 4.50% May-35 bond and NZ$25mn of the 2.75% Apr-37 bond.
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Historical bullets
JGB TECHS: (Z4) Bounce Reverses
- RES 3: 149.55 - High Mar 22 (cont)
- RES 2: 147.74 - High Jan 15 and bull trigger (cont)
- RES 1: 146.53 - High Aug 6
- PRICE: 143.70 @ 16:14 GMT Nov 08
- SUP 1: 143.39 - Low Nov 07
- SUP 2: 142.23 - Low Jul 02
- SUP 3: 140.21 - 1.236 proj of Mar 22 - Nov 1 ‘23 - Jan 15 price swing
Prices fell further Thursday, extending the recent pullback. The return lower at the start of this week has culminated in a break of 143.57, marking both the Jul 17 high on the continuation contract as well as the Oct 22 low. For now, the 50-dma tops out at 144.32, and marks first resistance. A continuation higher would open 146.53, the Aug 6 high (cont) and a bull trigger.
US TSY FUTURES: BLOCK: Late 2Y/10Y Ultra-Bond Flattener
- Flattener crossed late Friday at 1645:30ET, DV01 $322,000
- -8,900 TUZ4 102-23.88, sell through 102-24.38 post time bid vs.
- +3,700 UXYZ4 113-16, post time offer
USDCAD TECHS: Trend Needle Points North
- RES 4: 1.4179 2.0% 10-dma envelope
- RES 3: 1.4000 Round number resistance
- RES 2: 1.3977 High Oct 13 and a key M/T resistance
- RES 1: 1.3959 High Nov 1 / 6
- PRICE: 1.3910 @ 16:29 GMT Nov 8
- SUP 1: 1.3836/22 20-day EMA and a key S/T support / Low Nov 6
- SUP 2: 1.3744 50-day EMA
- SUP 3: 1.3611 Low Oct 8
- SUP 4: 1.3567 Low Oct 7
USDCAD reversed course Wednesday and recovered from Tuesday's low. The trend outlook is unchanged, it remains bullish. Attention is the key resistance at 1.3946, the Aug 5 high. This hurdle has been pierced, a clear break would strengthen the uptrend and open 1.3977, the Oct 13 high and a key medium-term resistance point. Initial firm support to watch lies at 1.3836, the 20-day EMA.
