BONDS: NZGBS: Yields Higher But off Best Levels, 2/10s Back Under +150bps

A former RBNZ Assistant Governor shares his OCR outlook. 
On MNI Policy MainWire now, for more details please contact sales@marketnews.com

The TYZ5 range has been 112-16 to 112-17+ during the Asia-Pacific session. It last changed hands at 112-17, up 0-00+ from the previous close. 

• The US 2-year yield is trading 3.619%.
• The US 10-year yield is trading around 4.139%.
• 10-Year yields drifted lower as the market prices in a US shutdown, I suspect buyers continue to be around 4.20% initially and look to fade the move higher. The jobs data if released will be key this week and if not then the ADP starts to take on a lot more relevance. 
• Bloomberg - "JD Vance said he believes the US government is heading for a shutdown, blaming Democrats for refusing to approve a short-term spending bill. Donald Trump and top congressional leaders failed to reach an agreement in a meeting before the Oct. 1 deadline."
• MacroEdge on X: “Government shutdown odds surge as Vance leaves meeting saying ‘we’re headed to a shutdown’ & GOP lacks votes to pass funding bill.” See Polymarket Odds Below.
• “Markets aren’t rushing to reduce risk exposure, having seen plenty of US shutdown threats before, Vishnu Varathan, head of macro research for Mizuho Securities, writes in a note” - BBG

• Data/Events:  FHFA House Price Index, S&P Cotality CS 20-City, MNI Chicago PMI, JOLTS Job Openings, Conf. Board Consumer Confidence, Dallas Fed Services Activity

  Fig 1: Polymarket Odds Of A US Shutdown

  

  Source: MNI - Market News/Bloomberg Finance L.P

• After doing very little Monday, bond futures have started Tuesday off with a rally.  
• The 10-Yr is up +0.10 at 107.76 and is near to the 20-day EMA of 107.81
• The 2-Yr future is up +0.01 at 102.35 and is near the 20-day EMA of 102.36.
• The 10-Yr government bond is at 1.88%