JGBS: Futures Down Post 2yr Debt Sale, US-JP 10yr Spread Down ~45bps This Mth

NZGBs closed 3-6bps richer, with a flatter 2/10 curve, but well off session bests. The local market was 7-8bps richer early after yesterday’s strong lead-in for US tsys. Cash US tsys are ~2bps cheaper in today’s Asia-Pac session.

• NZGBs slightly outperformed their $-bloc counterparts, with the NZ-US and NZ-AU 10-year yield differentials narrowing by 1-2bps. The NZ-US 10-year yield differential, now at -7bps, is edging closer to the cyclical low of -15bps recorded in December 2022—the lowest since late 2020.
• Swap rates closed 2-3bps lower.
• RBNZ dated OIS pricing closed 1-4bps softer across meetings, with late 2025 leading. 48bps of easing is priced for February, with a cumulative 113bps by November 2025.
• Tomorrow, Finance Min Willis speaks to the Select Committee on the Budget Policy Statement and Half-Year Economic and Fiscal Update. RBNZ Chief Economist Paul Conway will also present a speech titled: Beyond the Cycle: Growth and interest rates in the long run.
• On Thursday, the NZ Treasury plans to sell NZ$200mn of the 1.50% May-31 bond, NZ$200mn of the 4.25% May-36 bond and NZ$100mn of the 1.75% May-41 bond.

Per BBG headlines, the Japan Government has nominated Junko Koeda to the BoJ board. She will replace Seiji Adachi. 

• Per the new board member's website from Waseda Univsersity: "Ms. Junko Koeda previously held positions as a chief economist at the Ministry of Finance of Japan, an assistant professor at the University of Tokyo, and a staff economist at the International Monetary Fund. She has a Ph.D. degree in economics from UCLA and a bachelor’s degree from the University of Tokyo." (See this link for more details).