BONDS: NZGBS: Yields Retrace With Oil, 10yr Nears 20-day EMA

NZGB yields have faltered as the Wednesday session unfolded. Benchmark yields are down around 3-4.5bps across the curve, with the front end leading. The 2yr is back to 3.81%, the 10yr close to 4.90%. Whilst there is no cash US Tsy trading in Asia Pac today (with Japan markets still out), the bias in the region has been for higher bond futures, amidst further declines in oil futures (now tracking lower for the sixth straight amid US/Iran discussions (via mediators) and increased supply hopes). For the NZ 2yr this more than unwinds yesterday's rise and puts us back around levels that prevailed at the end of last week. * For the 10yr we are under end levels from last week and continue to unwind the mid Sep bounce. Note the 20-day EMA support point (in yield terms) rests close to 4.885%. The 2yr swap rate is back to 3.75%, also unwinding yesterday's RBNZ induced rise. * The NZ-US 10yr spread is tracking lower, last -5bps, with Sep lows resting at -9bps. * RBNZ hike expectations for Oct have been trimmed modestly, last back to around 65%, after rising above 70% after hawkish RBNZ remarks yesterday. * NZ rates markets will likely continue to take their cues from offshore/oil developments