BONDS: NZGBS: RBNZ Gov Still Expects Another 50bps Of Easing By YE
Sep-11 2025 04:49
NZGBs closed showing a modest bull-flattener, with benchmark yields 2-4bps lower.
- MNI AU - RBNZ Still Sees 2.5% OCR Trough Depending On Data: Governor Hawkesby noted at the Financial Services Council conference today that the economy has looked better in July and there are signs that growth will pick up in H2, as was expected. He also stuck with the August projection that the OCR will trough at 2.5% but said that "could occur faster or slower depending on how the economic recovery evolves", ie remains data dependent. The RBNZ expects Q2 GDP to fall 0.3% q/q (released September 18) but then recover to +0.3% in Q3 and +0.8% in Q4. 25bp rates cuts in October and November are expected.
- Westpac now expects New Zealand house prices to rise just 0.6% in 2025, down from an earlier projection of a 3.6% gain, Chief New Zealand economist Kelly Eckhold said in an emailed note. “The 3.6% gain we previously projected now looks optimistic given the recent momentum in prices,” Eckhold wrote. – per BBG
- RBNZ dated OIS closed showing 22bps of easing priced for October, with a cumulative 39bps by November 2025.
- Tomorrow, the local calendar will see BusinessNZ Manufacturing PMI and Card Spending data.
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AUSSIE BONDS: RBA Cuts As Expected, Limited Reaction
Aug-12 2025 04:49
ACGBs (YM -0.5 & XM -1.0) are moderately richer after the RBA cut the cash rate by 25bps to 3.60%.
- The Board noted that inflation continues to moderate toward the 2–3% range. Trimmed mean inflation fell to 2.7% and headline inflation to 2.1% in the June quarter. Domestic demand is gradually recovering, household incomes have risen, and labour market conditions, though easing, remain tight.
- With 75bps of cuts this year, the Board remains cautious but ready to respond to shifts in global or domestic conditions, maintaining its focus on price stability and full employment.
- Cash ACGBs are 1-2bps richer after the RBA decision, with the AU-US 10-year yield differential at -2bps.
- Swap rates are 2-4bps lower after the decision, with the 3s10s curve steeper.
- The bills strip has richened since the decision but sits flat on the day.
- RBA-dated OIS pricing is flat to 3bps softer across meetings after the decision, mid-2026 leading. A 25bp rate cut in August was given a 97% probability today. A cumulative 36bps of easing priced by year-end.
- Tomorrow, the local calendar will see the Q2 Wage Price Index.
- The AOFM plans to sell A$1200mn of the 4.25% 21 December 2035 bond tomorrow and A$1000mn of the 2.75% 2 1 November 2029 bond on Friday.
AUD: Asia Wrap - AUD Dips In Reaction To Cut, Focus Turns To Press Conference
Aug-12 2025 04:47
The AUD/USD has had a range of 0.6500 - 0.6526 in the Asia- Pac session, it is currently trading around 0.6510, -0.05%. Risk has traded a little higher in our session, E-minis +15%, NQU5 +0.15%. The AUD/USD has moved a couple of spreads lower in reaction to the RBA cutting rates by 25bps. Focus will now turn to the press conference, then the US CPI tonight.
- “ RBA Says: Will Be Attentive to Data, Evolving Assessment of Risks, Sees Risk Households, Firms Delay Spending, Policy Well Placed to Respond Decisively to Global Factors, Forecasts Assume Trade Concerns Weigh on Aust. Inflation, Trade Policy Expected to Have Adverse Effect on Global Eco.” - BBG
- "Australian Consumer Confidence Dn 1.3 Pts Last Week - ANZ Roy Morgan" - DJ
- AUSTRALIA DATA: Business Outlook May Have Turned. NAB’s measure of business confidence can be volatile but it has been trending higher since April and printed at 7 in July up from 5 in June and -2 in March signalling an improvement in how firms see the outlook. Business conditions moderated to 5, but are still above every month this year except June, which was revised down 2 points to 7. The activity components moderated in July but generally remained at levels above May.
- Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6565(AUD908m). Upcoming Close Strikes : 0.6575(AUD646m Aug 13), 0.6600(AUD1.25b Aug 14) - BBG
- CFTC Data shows Asset managers added to their shorts -60729(Last -49183), the Leveraged community added very slightly to their own shorts -13997(Last -13823).
- AUD/JPY - Asia-Pac range 96.37 - 96.83, Asia is trading around 96.60. The pair has bounced nicely and is testing its first resistance around the 96.50 area. There should be sellers around here initially, a sustained break below 94.50/95.00 is needed to signal a deeper move lower or a break above 97.50 would reinstate the momentum higher.
Fig 1: AUD/USD spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
RBA SEES CORE INFLATION AT 2.5% MIDPOINT BY END 2027
Aug-12 2025 04:35
- RBA SEES CORE INFLATION AT 2.5% MIDPOINT BY END 2027
