JGBS: Post-Wages Data Twist-Flattener Is Holding
Aug-06 05:05
JGB futures are weaker and at session lows, -26 compared to settlement levels.
- (MNI) Japan's inflation-adjusted real wage, a key gauge of household purchasing power, remained in negative territory for a sixth consecutive month in June but narrowed to -1.3% from May's 2.6% decline, preliminary data from the Ministry of Health, Labour and Welfare showed Wednesday.
- (Bloomberg) - The Japanese currency's recent strength can be expected to wane somewhat after wages data came in substantially weaker than had been expected. That's likely to be seen as reinforcing the BOJ's instinctive policy caution, pushing traders to pare back already modest bets on a rate hike this year.
- The cash JGB curve has twist-flattened, with benchmark yields 2bps higher to 1bp lower. The benchmark 10-year yield is 2.1bps higher at 1.493% versus the cycle high of 1.616%.
- Swaps are cheaper, with rates 1-2bps higher.
- Tomorrow, the local calendar will see Weekly International Investment Flow, Tokyo Office Vacancies and Leading/Coincident Index data alongside 30-year supply.
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NZD: Asia Wrap - NZD/USD Trades Soft As Risk Eyes Tariff Deadline
Jul-07 05:02
The NZD/USD had a range of 0.6009 - 0.6063 in the Asia-Pac session, going into the London open trading around 0.6010, -0.83%. The pair has traded under pressure for most of our session as the deadline for tariffs approaches and the risk this presents to global growth. The NZD should find support again around the 0.6000 area as it tries to build a base from which to move higher, a sustained break below here though would risk a deeper correction back to 0.5850/0.5900.
- "RBNZ SHADOW BOARD RECOMMENDS CASH RATE IS HELD THIS WEEK: NZIER" - BBG
- (Bloomberg) - “This week’s antipodean central bank meetings could set the stage for an Australian dollar rally against the kiwi — and spark a selloff in Aussie government bonds.”
- “The Reserve Bank of Australia is widely expected to deliver a second consecutive interest-rate cut, its first back-to-back easing in six years, while the Reserve Bank of New Zealand is likely to hold firm. That policy divergence is sharpening tactical positioning in FX and rates markets.”
- US President Trump has posted via Truth Social that the US will start delivering letters outlining tariff levels to various countries starting 12pm Monday, US eastern time. Trade deals will also be announced at the same time.
- A huge bounce from sub 0.5900 and the NZD has established a foothold above 0.6000, with the USD breaking lower the NZD/USD looked to be building for a potential break higher of its own. A sustained break back below 0.6000 though could negate this and risk a deeper reversion back to the 0.5850/0.5900 area.
- Options : Closest significant option expiries for NY cut, based on DTCC data: none. Upcoming Close Strikes : 0.6075(NZD519m July 9), 0.6000(NZD407m July10).
- AUD/NZD range for the session has been 1.0811 - 1.0832, currently trading 1.0825. The cross is struggling to get any momentum for now. It looks to be in a 1.0750 - 1.0850 range for now as it awaits a catalyst to provide some clearer direction.
Fig 1: NZD/USD Spot hourly Chart
Source: MNI - Market News/Bloomberg Finance L.P
MNI EXCLUSIVE: MNI Discusses China's Plans For A New Policy Based Bond
Jul-07 04:58
MNI discusses China's plans for a new policy-based bond. On MNI Policy MainWire now, for more details please contact sales@marketnews.com.
BONDS: NZGBS: Closed Slightly Richer, RBNZ Policy Decision On Wednesday
Jul-07 04:56
NZGBs closed mid-range, 2bps richer.
- Cash US tsys are flat to 3bps richer in today's Asia-Pac session after resuming trading following the long weekend.
- Swap rates closed 1-2bps lower.
- Tomorrow, the local calendar will be empty, with the next major event on the calendar being the RBNZ Monetary Policy Review on Wednesday.
- A majority of members in the NZIER Monetary Policy Shadow Board recommend that the RBNZ keep the cash rate on hold at 3.25%.
- RBNZ dated OIS pricing is little changed across meetings today. 3bps of easing is priced for this week's meeting, with a cumulative 31bps by November 2025.
- Notably, pricing is 9-15bps firmer across 2025 meetings compared to pre-RBNZ decision levels on May 28
- (Bloomberg) RBNZ Chief Economist Paul Conway will give a speech about global tariffs on July 24, from 1:30 pm in Wellington, the central bank says in an emailed advisory. Speech will cover the various ways global tariffs will impact us here in New Zealand, and how the RBNZ is thinking through the impacts on inflation and the economy more broadly.
- On Thursday, the NZ Treasury plans to sell NZ$250mn of the 3.00% Apr-29 bond and NZ$200mn of the 4.50% May-35 bond.
