By Kymberley Martin
The NZ swap curve flattened yesterday. Overnight, US benchmark 10-year yields slipped further, to 2.68%.
It was another relatively quiet day in NZ markets although we did see a decent flattening of the swap curve.
Long-end yields followed the move lower in US yields. NZ 10-year swap closed down 4bps at 5.02%. 2-year swap closed virtually unchanged at 4.01%.
The shorter-end of the curve continues to be supported by steady pay-side flow from both corporates and the mortgage book.
NZ bonds sold off a little ahead of the DMO’s tender of $200m of NZGB 2020s, despite the offshore rally. The tender saw a solid 3.8 x bid-to-cover ratio and a range of 3.355%-3.390%. There is no more issuance for another month now while decent coupon flows are due mid-April. We suspect this should see some support come into the NZGB market.
Overnight, US 10-year yields slipped a little further even as US 2-year yields pushed higher. US 2-year yields, at 4.45%, remain around 10bps above last week’s pre-FOMC meeting levels. US 10-year yields sit at 2.68%.
Today, there is nothing of note on the NZ data agenda.
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