By Kymberly Martin
NZ curves flattened further yesterday.
US yields declined along with the USD overnight. US 10-year yields sit at 2.37% at present.
NZ 2-year swap closed 1 bps higher while 10-year closed down 3 bps.
As a consequence the curve flattened to new cyclical lows of 53 bps. It was last at this level in November 2008.
Strategically, we expect further flattening to a trough of around 40 bps early next year. Our forecast assumes an eventual push higher in US yields which will exert upward pressure on the NZ long-end. This should prevent the NZ curve from inverting as OCR hikes raise short-end yields.
For now, NZ 2 and 5-year swap sit at 4.04% and 4.57% respectively.
We continue to believe it will be difficult for 2-year to break much below 4.0% unless the RBNZ entirely abandons its tightening bias at its 11 September meetings. We see this as highly unlikely.
Longer NZ bond yields also closed down 3 bps yesterday. The yield on NZGB23s now sits at 4.13%., close to its mid-August lows (4.10%).
Overnight, there was a dearth of major data releases but fighting in Ukraine appeared to continue unabated despite talks between Russian and Ukraine presidents.
While equities were almost completely flat on both sides of the Atlantic, a bid tone remained for US Treasuries. US 10-year yields drifted down from 2.39% to 2.37%. Meanwhile German equivalents sunk to new all-time lows of 0.91%.
The next domestic data focus will be tomorrows ANZ business confidence survey. For today, it is a busier agenda offshore.
Daily swap rates
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results of an August 18-25 HorizonPoll of 1,752 adults nationwide.
By large majorities they find dirty politics unacceptable and would prefer them not to be practised:
- They are unacceptable to 59.9% of adults and acceptable to 25.8% as a part of overall political behaviour.
- 81.9% of adults prefer that dirty politics were not practised in New Zealand.
73.7% believe that, if it is true as alleged in the book that a member of the staff of Prime Minister John Key’s office accessed confidential information held in a Labour Party web site, the behaviour is unacceptable.
They tend to believe the Prime Minister knew in advance about attacks on political opponents planned by pro-National bloggers and that the bloggers did not act totally independently of the National-led government.
More than half of adult New Zealanders (53.1%) believe mainstream media (newspapers, radio and television) have failed to act impartially in relation to material provided to them by bloggers. While 40.9% are not sure whether the media’s coverage of all aspects of the allegations made in Mr Hager’s book has been adequate, there is a small tendency to believe that it has not been.
http://www.horizonpoll.co.nz/page/379/significant-fall-out-from-dirty-p…
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