NEW ZEALAND: Oct Jobs Filled Flat, Y/Y Down 0.5%, Weakness In Goods Industries

US Bond futures continue to tread water ahead of this week's FOMC with price action muted and volumes average.  TYZ5 finished marginally up at 113-15+, a gain of +02 and have opened the Asia trading day at 113-15, trading flat with very low volumes at the open.  

Cash curves flattened again, after an average 7-Yr auction.  Some commentators described the auction as 'average' though with the bid to cover at 2.46x, it was consistent with the prior two 7-Yr auctions of 2.40x and 2.49x. 

• The 2-Yr edged up +0.4bps to 3.492%
• The 5-Yr was up +0.3bps to 3.611%
• The 10-Yr declined -0.6bps to 3.978%
• The 30-Yr continues to be the outperformer, down -1.2bps to 4.542%

In data, Conference Board consumer confidence was mixed, with the headline index deteriorating less acutely than expected and the "labor differential" stabilizing after a multi-year low posted in the prior month - suggesting little additional urgency for the Fed to cut rates to buoy employment.  On that front we also got a surprise announcement from ADP that they would henceforth produce a weekly private payrolls update, the first of which showed a solid-by-recent-standards 57k gain in the 4 weeks to Oct 11, potentially underpinning cautious sentiment in rates.

The Richmond Fed's Fifth District sectoral surveys showed improvement in activity in October, but very divergent inflation sequential developments across Manufacturing vs Services.  The manufacturing survey's Composite Index showed a strong improvement in activity in October to -4 from -17 prior, marking the best reading since February and much better than the -12 consensus expectation, albeit still in soft territory (the report characterizes it as "slow" activity). New orders picked up to -6 from -15 (joint highest since February) and employment and shipments rose, though expectations fell to -5 from -1.

Ahead of tomorrow's FOMC decision, markets still broadly eye back-to-back cuts before a shift to a quarterly pace with a subsequent cut in March, but with slightly less conviction on a June cut.

• Cumulative cuts from 4.12% effective: 26bp for tomorrow, 48.5bp Dec, 61.5bp Jan, 72.5bp Mar, 79bp Apr and 92.5bp Jun.
• MNI Fed Preview: https://media.marketnews.com/Fed_Prev_Oct2025_With_Analysts_2c9e326366.pdf

NZGB yields have started Wednesday trade off relatively steady, still under key resistance levels. This follows an indifferent Tuesday US session. We do have an RBNZ Governor speech today (on central bank independence), while spill over from the Q3 Aust CPI is also possible. Anticipation is also building ahead of the likely Fed cut and possible decision to end QT (later on Wednesday). Front end US Tsy yields were a touch firmer in Tuesday trade, while the 10yr yield drifted down (remaining sub 4.00%). 

• For NZGBs yields hold close to recent highs, 2.535% for the 2yr, 3.99% for the 10yr. Upside focus rests at 2.61% for the 2yr (which is the 20-day EMA), while recent lows are near 2.50%. The 10yr 20-day EMA is near 4.07% (recent lows around 3.95%).
• The 2yr swap is relatively steady in early trade, near 2.36%, which is close to its 20-day EMA resistance point (2.38%).
• In the cross asset space, US equity sentiment was mostly supported, although oil prices moved off recent highs.
• RBNZ Governor Hawkesby will speak about the importance of central bank independence just after 5pm local time today (04:05 BST). Given the new incoming RBNZ Governor will be in place soon Hawkesby may not touch much on the short term monetary policy outlook. A 25bps cut for the Nov meeting is fully priced.
• The local data calendar is empty today, but be mindful of spill over from the Aust CPI print, where Nov RBA easing expectations have been pared back in the wake of recent cautious RBA Governor Bullock comments. 

Aussie outperformed finding support from stronger-than-expected US survey data and rising US equities. AUDUSD fell to 0.6544 but then rose to 0.6591 finishing up 0.5% at 0.6585 and is currently around 0.6583. Kiwi was also able to capitalise on these factors. The USD was weaker again with the BBDXY down 0.1%.

• AUDUSD broke above initial resistance at 0.6586 but then traded just below this level, where it is now. Key resistance is at 0.6629 with initial support at 0.6440, 14 October low.
• Australia’s Q3/September CPI data print today and will be watched closely for direction on the 4 November RBA meeting. Q3 trimmed mean is expected to rise 0.8% q/q leaving annual inflation stable at 2.7% y/y.
• NZDUSD fell to a low of 0.5759 before the US data were released and then rebounded to 0.5789 and finished up 0.2% to 0.5781. It has started today around this level.
• With Aussie outperforming, AUDNZD rose 0.3% to 1.1392, close to the intraday high at 1.1396, but is currently slightly lower at 1.1388. Difference in central bank stances could push the pair higher, as the RBNZ is widely expected to ease in November but the RBA’s caution could mean it remains on hold.
• Acting RBNZ Governor Hawkesby speaks on central bank independence at 1705 NZT/1505 AEDT. The speech will be published on the RBNZ website. Also at 1100 NZT/0900 AEDT, RBNZ Director of Financial Markets Richardson speaks on the monetary transmission mechanism to domestic financial conditions.