BONDS: NZGBS: Closed With A Bull-Flattener But Well Off Bests, Mid-East In Focus
Jun-13 04:41
NZGBs closed well off session bests but still showing a bull-flattener, with benchmark yields flat to 2bps lower. News that Israel had conducted an airstrike in Iran earlier today sent global yields tumbling. NZGBs were as much as 5-8bps richer early in the session.
- Netanyahu said that this was a decisive moment in Israel's history. It is targeting Iran's nuclear infrastructure, ballistic missile factories and military capabilities. (per RTRS/BBG).
- "Iran Says to Respond 'Harshly' Against US, Israel Over Attacks. Iran's Armed Forces spokesperson Abolfazl Shekarchi says "the Zionist regime and the US will receive a harsh blow," in response to Israel's attacks earlier Friday. " - BBG.
- Cash US tsys are 1-2bps richer, but off session bests, in today’s Asia-Pac session.
- NZGBs have underperformed its $-bloc counterparts with the NZ-US and NZ-AU 10-year yield differentials closing today’s session 4bps wider at +21bps and +38bps respectively.
- RBNZ nowcast estimate of New Zealand Q1 GDP growth is 0.63% - BBG
- Swap rates closed 3-4bps lower.
- RBNZ dated OIS pricing closed 2-3bps softer across meetings. 6bps of easing is priced for July, with a cumulative 30bps by November 2025.
- On Monday, the local calendar will see Performance Services Index data ahead of Food Prices on Tuesday.
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BONDS: Heavy Session, Underperformed $-Bloc, Food Prices Tomorrow
May-14 04:37
NZGBs closed 7-10bps cheaper, underperforming its $-bloc counterparts. The NZ-US and NZ-AU 10-year yield differentials closed respectively wider by 3bps and 5bps.
- There has been no net movement in cash US tsys in today's Asia-Pac session.
- “A record number of people left New Zealand in the year through March, reducing the net gain through immigration to the lowest in more than two years. Some 123,256 people departed the country in the period, including 70,000 New Zealand citizens.” (per BBG)
- Total card spending fell 0.2% m/m versus a revised -1.6% in March.
- The RBNZ balance sheet shrunk further in April to its smallest since 2021.
- Swap rates closed 9-15bps higher, with the 2s10s curve steeper.
- RBNZ-dated OIS pricing is flat to 3bps firmer across meetings today, leaving rates 2–14bps above levels seen prior to the Q1 CPI release on April 17. 25bps of easing is priced for May, with a cumulative 69bps by November 2025.
- Tomorrow, the local calendar will see Food Prices and a speech by Finance Minister Willis on Social Investment.
- On Thursday, the NZ Treasury plans to sell NZ$200mn of the 4.50% May-30 bond, NZ$200mn of the 4.25% May-36 bond and NZ$50mn of the 1.75% May-41 bond.
GOLD: Gold Falls as Chinese Equities Rally
May-14 04:30
- Gold slowly lost ground throughout the trading day as momentum in equities saw key indexes higher.
- Overnight the latest CPI print in the US was softer, giving hope for rate cuts and pushing the USD dollar lower. It is likely that the impact of tariffs is yet to be felt in CPI prints and forecasters remain cautious on the data.
- With limited key data in Asia today, gold took its lead from the equity move and is down -0.77% at US$3,226.46.
- Gold remains at the mid-point between the 20-day EMA of $3,272.69 and the 50-day EMA of $3,166.88
- UBS Group AG’s rich clients are increasingly shifting away from US-dollar assets, turning instead to gold, crypto and investments in China, according to the Swiss bank’s co-head of wealth management for Asia.
US TSYS: Cash Bonds Little Changed After Yesterday's Tame CPI
May-14 04:19
TYM5 is dealing at 110-04, +0-05 from closing levels in today's Asia-Pac session.
- According to MNI’s technicals team, Treasury futures maintain a softer tone following recent weakness. Support at 110-01+, a Fibonacci retracement point, has been broken. Clearance here strengthens a bearish theme and exposes a key support at 109-08, the Apr 24 low. Key near-term resistance has been defined at 111-22, the May 7 high. A break of this level is required to signal a potential reversal.
- There has been no net movement in cash US tsys in today's Asia-Pac session after being little changed yesterday following the tame April CPI report.
- The 10-year yield range seems to be 4.10% - 4.50%, with the yield currently testing the upper bound of this range. A sustained break above this level would see another round of selling targeting the 4.75% area.
- Data: US MBA Mortgage Applications
