The end of the US government shutdown is imminent. US Treasuries have traded a tight range. Another regional Fed boss quits

Market movements have been modest in the absence of any breaking news.

The end of the US government shutdown is imminent later today, when House lawmakers vote on a bill that has already been approved by the Senate and President Trump. There will be some delays in reopening over coming days so the economic hit will endure a little longer, before activity bounces back. By next week we might see the return of some official economic releases.  The government will be funded through 30 January, while select agencies will be funded through the whole fiscal year.  Some work will be required to avoid another shutdown in just over two months.

Atlanta Fed President Bostic announced that he would retire when his term ends in February.  The Atlanta Fed’s Board will appoint a successor, and this will need approval by the Fed Board of Governors. The new Atlanta Fed President isn’t a voting member of the FOMC until 2027, so there are no near-term implications for monetary policy, even if President Trump gained control of the reappointment process early next year.

US Treasuries have traded a tight range overnight, with the 10-year rate tracking between 4.05-4.09% and currently sitting towards the bottom end and down about 2bps from the NZ close.

The S&P500 is barely higher in early afternoon trading, but most stocks are higher as the index has been weighed down by a 1.3% fall in the Magnificent Seven stocks.  The end of government shutdowns is typically positive for US stocks.  The Dow Jones index is up 0.8% to a fresh record high. The Euro Stoxx 600 index rose 0.7% to a fresh record high.

Net currency movements have been modest over the past 24 hours and overnight.  Both the NZD and AUD have pushed higher to 0.5665 and 0.6540 respectively.

GBP continues to trade on the weak side of the ledger in the wake of softer labour market data earlier this week which increased the chance of the BoE cutting rates next month, and some nerves ahead of the UK Budget later this month. Domestic politics might also be a factor, with reports of PM Starmer feeding a narrative of a leadership crisis out of nowhere.  Starmer declared he will fight any challenger, even though there hasn’t been a challenge.  NZD/GBP is trading back over the 0.43 mark.

JPY is also on the softer side, continuing its weaker run since Takaichi won the LDP leadership battle. Yesterday, she said that monetary policy is vital for establishing a strong economy and stable inflation and noted that the government and the BoJ will continue to “work together”.  While her influence isn’t expected to get in the way of a possible BoJ rate hike within a few months, it will fuel the overly cautious stance the BoJ is taking to address higher inflation. USD/JPY hit 155 overnight, a fresh nine-month low for the yen, before reversing course a little. NZD/JPY has pushed up to 87.6.

Yesterday, NZGB yields were little changed, with falls of no more than 1bp against a backdrop of lower Treasury yields.  NZDM announced the syndication panel for the tap of the 2036 bonds, suggesting that it will be launched next week.  In the swap market, the 2-year rate was unchanged at 2.54% while the 10-year rate fell 2bps to 3.65%.

On the calendar today, NZ electronic card transactions data are released followed by Australia’s labour market report, where the consensus sees the unemployment rate ticking down to 4.4% from a four-year high.  Tonight, UK Q3 GDP is expected to show a small lift of 0.2% q/q.

Jason Wong is the senior Markets Strategist at BNZ Markets.