AUSSIE BONDS: Richer But AU-US 10Y Diff Back At Cycle High

NZGBs closed showing a bull-flattening, with benchmark yields flat to 2bps. 

• NZ-US and NZ-AU 10-year yield closed unchanged at +33bps and -28bps.  
• Cash US tsys are flat to 1bp richer, with a flattening bias, in today's Asia-Pac session. US ADP private employment & JOLTS data today, NFP Friday.
• NZ swap rates are flat to 3bps, with a flatter curve. Nevertheless, the 2s10s curve remains near cycle highs, the steepest since 2021.
• RBNZ-dated OIS pricing is little changed across meetings. No tightening is priced for February, while October 2026 assigns 20bps.
• The local data calendar is very light this week. Next week we get Nov filled jobs, along with food prices as well.

Bloomberg Finance LP

The number of building approvals in November jumped 15.2% m/m after falling 6.1% m/m driven by the volatile multi-dwelling component. Private houses rose 1.3% m/m after falling 1.3% in October but were still up only 3.2% y/y. They appear to be recovering from the Q2/Q3 2025 dip. Momentum is picking up across both houses and apartments but the former is still soft.

• Strong demand and supply shortages have driven home prices higher. Approvals have struggled to improve as needed. A gradual uptrend in the total has been due to the non-house component but it remains 20% below the 2021 peak.
• Queensland and Victoria drove the jump in multi-dwelling approvals, which were their highest since June 2018 and up 55.3% y/y.
• The level of house approvals has been moving sideways since Q3 2024. The November rise was due to NSW and Queensland while they fell in SA. 

Australia number of dwellings approved

Source: MNI - Market News/ABS

RBA-dated OIS is little changed versus pre-CPI levels. The pricing shows tightening across all meetings, with the probability of a 25bp hike rising from 38% for February to 116% by June and 184% by December 2026.

Figure 1: RBA-Dated OIS – Current 

Source: Bloomberg Finance LP / MNI