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The yield on NZGB23s is now at 4.07%, close to its lowest level since June last year

Bonds
The yield on NZGB23s is now at 4.07%, close to its lowest level since June last year

By Kymberly Martin

NZ swap and bond yields closed down 2-3 bps yesterday.

Overnight, US 10-year yields dipped as low at 2.28% before returning to trade at 2.32%.

NZ yields dipped a little further yesterday, prompted by the decline in US yields that followed the release of the US FOMC Minutes.

Fed Fund Futures have pushed back the pricing of the first Fed hike to later in Q3, from mid-year not too long ago.

NZ 2 and 5-year swap closed yesterday at 4.02% and 4.29% respectively. We continue to believe a sustained break below 4.00%, for 2-year swap, will be hard to achieve. A push below current levels would therefore provide good risk-reward for borrowers looking to hedge some rate risk.

NZ bond yields closed down 2-3 bps. The yield on NZGB23s is now at 4.07%, close to its lowest level since June last year.

Overnight, the Bank of England left its cash rate unchanged at 0.5%, as expected. Some slowing in UK momentum and the proximity of Eurozone woes has caused the market to push back expectations for the first BoE rate hike next year. Earlier in the year, this had been priced for Q1 2015, now it is priced for late in Q3.

Today, there are no domestic data scheduled. Tonight there is a bevy of US Fed members scheduled to speak.

 
 
 
 
 
 
 
 

Daily swap rates

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Opening daily rate
Source: NZFMA
Opening daily rate
Source: NZFMA
Opening daily rate
Source: NZFMA
Opening daily rate
Source: NZFMA
Opening daily rate
Source: NZFMA
Opening daily rate
Source: NZFMA
Opening daily rate
Source: NZFMA

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