BONDS: NZGBS: Little Changed, Trump Speaks At WEF, Light Local Calendar
Jan-23 22:02
In local morning trade, NZGBs are unchanged after US tsys mostly weakened. US curves twist-steepened after President Trump demanded that "interest rates drop immediately" when he spoke remotely at the World Economic Forum meeting in Davos, Switzerland.
- Trading was orderly and calm as the markets continued to absorb the bullish economic policies of the new administration. US yields finished 1bp lower to 5bps higher.
- Trump's comments caused the greenback to spike suddenly higher, but this was immediately reversed, highlighting the ongoing sensitivity of FX markets to any comments from the President. Following this, the greenback drifted lower, with the USD index slightly in the red.
- Initial jobless claims were a touch higher than expected at 223k (sa, cons 220k) in the week to Jan 18, covering the payrolls reference period, after an unrevised 217k. The four-week average only increased from 1k to 214k, still low historically and below the 218k average in 2019 for context.
- Swap rates are flat to 1bp higher.
- RBNZ dated OIS pricing is little changed. 47bps of easing is priced for February, with a cumulative 111bps by November 2025.
- Today, the local calendar is empty, with the next release being Filled Jobs data on Tuesday.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
LOOK AHEAD: Thursday Data Calendar: Weekly Claims, Tsy Bills & 7Y Note Sale
Dec-24 18:38
- US Data/Speaker Calendar (prior, estimate)
- Dec-26 0830 Initial Jobless Claims (220k, 223k)
- Dec-26 0830 Continuing Claims (1.874M, 1.881M)
- Dec-26 1130 US Tsy $75B 4W, $70B 8W bill auctions
- Dec-26 1300 US Tsy $44B 7Y Note auction & $64B 17W bills
STIR: FED Reverse Repo Operation
Dec-24 18:24
RRP usage climbs to $180.989B this afternoon from $116.004B yesterday. Compares to $98.356B last Friday - the lowest level since mid-April 2021. The number of counterparties climbs to 52 from 47 prior.
US TSYS: Late Session Rebound, Post-Auction Short Sets Unwound
Dec-24 18:19
- Treasury futures look to finish Tuesday's shortened Christmas-eve session near session highs, TYH5 +2.5 at 107-17 vs. 108-19 high, after trading much of the session weaker. The 10Y contract had breached a couple levels of technical support on it's way down to 108-09.5 low, 10Y yield climbing to 4.8160% high last seen in late May.
- Rates recovered soon after the $70B 5Y note auction (91282CMD0) stopped 0.2bp through (second consecutive stop since June): drawing 4.478% high yield vs. 4.480% WI; 2.40x bid-to-cover vs. 2.43x for the prior auction.
- The bounce helped projected rate cuts into early 2025 look steady to slightly higher vs. this morning (*) as follows: Jan'25 steady at -2.1bp, Mar'25 at -12.6bp (-11.7bp), May'25 -17.2bp (-16.7bp), Jun'25 -24.6bp (-23.1bp).
- No substantive reaction to regional Fed data:
- -6.0 reading for December's Philadelphia Fed's Nonmanufacturing current regional activity index (-2.4 expected) represented a steady outturn from -5.9 prior, and suggested a regional services sector that remained "weak", per the report.
- Richmond Fed's regional manufacturing survey index came in in at -10 as expected in December, the best reading since June (-14 prior). The shipments and employment subindices were flat, but new orders saw a solid improvement to -11 from -19 prior.
- Markets closed for Christmas holiday Wednesday, Globex pre-open Wednesday evening at 1700ET/re-open at 1800ET. Full sessions Thursday & Friday.
