Buoyant risk sentiment supports global equities ahead of key Nvidia results. Yen weakens and JGB curve steepens after the government nominated two dovish-leaning policy board members

Risk sentiment remains buoyant, driving further gains across global equities ahead of Nvidia’s results due after the US close. The S&P 500 is up more than 0.5% in afternoon trade, while European and Asian markets are also well supported. The Euro Stoxx has pushed to a fresh record high and the Nikkei closed over 2% higher. Sovereign bond and FX markets were little changed.

US trade policy uncertainty is back in focus after the White House flagged plans to lift the global US tariff rate to 15% ‘where appropriate,’ while emphasising continuity with existing trade agreements. US Trade Representative Jamieson Greer said countries with deals would avoid a higher cumulative tariff burden, and the administration will use a 150‑day window to run trade investigations that could ultimately lead to more targeted, permanent tariffs by country and industry.

It was a quiet session for global rates markets in the absence of first-tier data or other catalysts. 10- treasuries were little changed near 4.04% as the market consolidates towards the lower end of the range from the past six months. The exception was in Japan where there was a notable curve steepening, led by underperformance at the longer end of the curve, after the government nominated two dovish-leaning policy board members. 30-year JGB yields increased 8bp to 3.34%.

The yen weakened as investors scaled back expectations for Bank of Japan tightening. USD/JPY traded to a two‑week high, while money markets pared year‑end hike pricing. There is 43bp of tightening priced by December, down from 53bp at the start of the week. Elsewhere, there was little impact in currency markets after President Trump reiterated his resolve to impose trade tariffs in his State of the Union address.

The AUD outperformed has outperformed after inflation data surprised to the upside. This move has seen AUD/JPY reach the highest level since 1990. NZD/USD is modestly higher relative to the local close yesterday and is also firmer against the yen. NZD/AUD has fallen to fresh multi-year lows near 0.8410.

Australia monthly CPI for January was stronger than expected, underpinning expectations for a further 25bp hike in May and that policy may need to stay restrictive for longer. The trimmed‑mean CPI rose 3.4% y/y versus the 3.3% consensus estimate and follows data last week which pointed to a resilient labour market. Front end yields increased immediately after the release supporting the AUD. The market is pricing 22bp of tightening by the May RBA meeting and a cumulative 39bp by year-end.

NZ swap rates ended the local session 1-2bp higher across the curve with few domestic catalysts. There was limited spillover to NZ rates after the move in Australia following the CPI data. The government curve largely matched the move in swaps but saw some underperformance in the ultras. The NZGB 10Y/30Y curve steepened to +65bp having bounced off the +60bp level for the second time in recent months.

NZ Debt Management will undertake the weekly bond tender today. NZ$450 million is being offered across May-2031 ($250m) and May-2034 (NZ$200m) lines. A small parcel of Sep-2035 inflation-indexed bonds will be included in the tender.

ANZ business confidence is the only domestic release of note in the day ahead. Firms’ activity outlook eased in January but remains at elevated levels. Inflation expectations and pricing intentions will be closely watched. In the US, initial jobless claims are due and are expected to remain volatile amid seasonal adjustment effects.

Stuart Ritson is a Markets Strategist at BNZ Markets.