BONDS: NZGBS: Richer, US Tsys Stronger After CPI Data
May-10 21:57
NZGBs opened 4-5bp richer with US tsys yield lower after US CPI data details point to some inflation cooling. In April, US CPI inflation rose in line with expectations, with both headline and core ex-food and energy measures increasing by 0.4% m/m. However, the breadth of the overall price pressures eased notably back to pre-pandemic levels.
- Swap rates opened 5-6bp lower with the long-end implied swap spread tighter.
- RBNZ dated OIS opened 1-5bp softer across meetings with 23bp of tightening priced for the upcoming May 24 meeting.
- NZ Finance Minister Robertson gives his pre-budget speech saying inflation has peaked but remains too high with the Government “committed to playing our part in bringing it down, including reducing our spending as a percentage of the economy over the coming years”. The budget will have four overriding themes: cost-living support, delivering services, recovery and resilience, and fiscal sustainability.
- REINZ House Price Index falls 12% y/y but shows some tentative signs of stabilisation.
- April Food Prices are slated for today with the annual rate expected to remain firm.
- The NZ Treasury plans to sell NZ$200mn of the 0.25% 15 May 2028 bond, NZ$150mn of the 3.50% 14 April 2033 bond and NZ$50mn of the 2.75% 15 May 2051 bond.
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JPY: Yen Pressured After Ueda Signals Policy Change Unlikely
Apr-10 21:53
JPY was pressured yesterday, yen was the worst performer in the g-10 space at the margins. USD/JPY rose ~1.1% and last prints at ¥133.50/60.
- BOJ Gov Ueda noted in his inaugural speech that he'll do all he can to ensure stability in prices and in the financial system, also noting that current monetary easing is very powerful.
- He signalled that any significant changes to its monetary policy framework are unlikely for the time being.
- The pair broke the 20-Day EMA and now sits a touch above it. The next target for bulls is ¥134.75 61.8% retracement of Mar 8-24 bear leg. Support comes in at ¥130.64, low from Apr 5, a break through here opens ¥129.64 the bear trigger
- The preliminary print of March Machine Tool Orders is the only domestic data due today.
BONDS: NZGBS: Opens Weaker After Extended Easter Holiday
Apr-10 21:47
NZGBs open 4-5bp weaker as the local market plays catch up to developments in US Tsys after the extended Easter holiday. US Tsy yields climb higher in morning NY trade and hold in a narrow range through a generally subdued session.
- After the bell, US Tsy yields were 2-3bp higher on the day with the 2-year and 10-year yields respectively 25bp and 12bp higher than the levels coinciding with the local market’s close on Thursday. NZ/US 10-year yield differential is -7bp at +58bp.
- Trade volumes will likely improve today with London back online ahead of Wednesday's release of US CPI and FOMC minutes for the March meeting.
- Swap rates open 8bp higher with implied swap spreads 3bp wider.
- RBNZ dated OIS pricing opens firmer across meetings with 21bp of tightening priced for May. 40bp of easing is priced for Feb-24 off a terminal OCR expectation of 5.48% (July).
- The Antipodean calendar is light today with Australia’s release of Westpac Consumer Confidence (Apr) and NAB Business Confidence (Mar) as the highlights.
- Further afield, China releases March CPI/PPI data today ahead of Euro Area Retail Sales and US NFIB Small Business Optimism.
AUD: Firms Off Session Lows After Pressure In Europe
Apr-10 21:23
AUD/USD prints at $0.6640/45, the pair was ~0.5% softer yesterday.
- The greenback was on the front foot through the European session as odds of another 25bp rate hike by the Federal Reserve increased to 80% and a rally in USD/JPY spilled over into wider USD strength. AUD/USD was pressured printing its lowest level since March 24.
- Support was seen at $0.6620, a recovery off session lows in US Equities boosted risk sentiment and the AUD/USD firmed into the close.
- Bears look to target 2023 lows at $0.6565. Bulls first look to break the 20-Day EMA ($0.6692) to turn the tide.
- Cross asset flows were mixed; DXY was up ~0.5% and S&P500 finished a touch firmer. 10 Year US Treasury Yields were ~2bps firmer. Iron Ore futures rose ~1.3%, and Copper futures fell ~1%.
- On the wires this morning we have April Westpac Consumer Confidence and March NAB Business Survey.
