NZ rates higher but little drive; German rates fall again, ECB expected to cut although markets not certain

By Raiko Shareef

NZ interest rates were marked higher at the open yesterday, but there was little follow-through from there.

The apparent appetite from local mortgage books and corporates to pay fixed rates helped the 2-year swap close 1 bp higher at 4.08%.

Globally, bond markets were fairly subdued, given the US Treasury market was closed.

German 10-year bonds slipped a further 1 bp to 0.88%.

In terms of the ECB meeting on Thursday, market pricing suggests a 50% chance the Bank will cut its policy rate by 10 bps.

In contrast, only 5 of 47 analysts surveyed by Bloomberg expect a change in rates.

We sit with that camp.