BONDS: NZGBS: Richer, NZ-AU 10Y Diff Back Near Lows
Dec-19 03:50
NZGBs closed 1-3bps richer, with the 5-10-year zone leading. The 5-year yield, nevertheless, remains 35bps higher than pre-RBNZ levels.
- The NZ–AU 10-year spread has returned close to cycle lows after briefly rising by around 20bps following the RBNZ’s final policy meeting of the year. The subsequent move back toward the lows was driven by comments this week from RBNZ Governor Anna Breman, who pushed back against market expectations of an interest-rate hike next year, indicating that the OCR is likely to remain unchanged for some time (see chart).
- NZ domestic spending on all cards rises 1.6% m/m, +4.7% y/y.
- NZ business confidence soared to a three-decade high in December and the mood of consumers also surged, adding to signs of further economic expansion. A net 74% of firms expect better business conditions — the most since March 1994, ANZ Bank said. Expectations of own-trading were also at a 31-year high, while a monthly gauge of consumer sentiment rose to 101.5 in December, the highest since September 2021, ANZ said in a second report.
- RBNZ-dated OIS pricing shows no tightening priced for February, while November 2026 assigns 42bps.
- Next week, the local calendar will be empty in the run-up to the Christmas break.
Bloomberg Finance LP
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JGBS AUCTION: Poor Demand Metrics For 20Y Auction
Nov-19 03:46
The 20-year JGB auction delivered weak results across key metrics. The low-price underperformed dealer forecasts, which were set at 98.60 according to a Bloomberg poll. Moreover, the cover ratio dropped to 3.2825x from 3.5599x in the previous outing, and the auction tail lengthened sharply to 0.31 from 0.10.
- As noted in the auction preview, today’s offering featured an outright yield at its cycle high, 10-15bps above last month’s level.
- Moreover, the 10/20 yield curve remained near its recent high, its steepest since 1999.
- Accordingly, this result aligns with the lacklustre performance observed in the 30-year JGB auction earlier this month.
- Post-auction, the 20-year JGB is ~1bp cheaper.
Source: Bloomberg Finance LP
JGBS AUCTION: 20-Year JGB Auction Results
Nov-19 03:39
The Japanese Ministry of Finance (MOF) sells Y600.7bn 20-Year JGBs:
- Average Yield (%): 2.809 (prev. 2.674)
- Average Price: 98.61 (prev. 100.33)
- High Yield (%): 2.833 (prev. 2.684)
- Low price: 98.30 (prev. 100.20)
- % Allotted At High Yield (%): 64.9769 (prev. 9.6410)
- Bid/Cover: 3.2825x (prev. 3.5599x)
JGBS: Modestly Cheaper Ahead Of 20Y Supply, BOJ/FinMin Meeting Today
Nov-19 03:23
At the Tokyo lunch break, JGB futures are weaker, -21 compared to settlement levels.
- Headlines crossed a little while ago that BoJ Governor Ueda will meet with Japan FinMin Katayama and Economy Minister Kiuchi later today. The meeting is expected to take place at 910GMT, which is 6:10pm Tokyo time. At 930GMT, FinMin Katayama will hold a press conference. This follows yesterday's meeting between Ueda and Japan PM Takaichi. From that meeting, via BBG: " Ueda told Takaichi that the BOJ is gradually scaling back its easing measures, which he said she understood. He added that they also discussed recent currency moves."
- This meeting also comes amid renewed speculation around Japan's fiscal outlook. The Kyodo news agency reported on Wednesday that Japan's stimulus package could exceed 20 trillion yen and be funded by an extra budget of around 17 trillion yen."
- Cash US tsys are flat to 1bp cheaper in today's Asia-Pac session. Nvidia's earnings are in focus and due after the market close on Wednesday.
- Cash JGBs are 1-2bps cheaper across benchmarks. The benchmark 20-year yield is 1.7bps higher at 2.804% after setting a fresh cycle high of 2.822% earlier today.
- Swap rates are 1bp higher to 2bps lower, with a flattening bias.
