By Raiko Shareef
NZ interest rates closed unchanged across the board yesterday, but that’s not to say there was nothing going on.
Local swap yields failed to take their lead from the rise in offshore bond yields on Tuesday night, largely due to continued interest in receiving NZ rates.
The 2-year swap yield held steady at 3.90%.
Overnight, US bond yields crept higher in a rather quiet session ahead of the FOMC decision this morning.
The relatively hawkish statement saw short-end yields spike higher.
The 2-year Treasury bond yield is up 6 bps for the day, while the 10-year yield is up 3 bps at 2.33%.
Today, all eyes are on the RBNZ. No one expects Governor Wheeler to adjust the OCR, but the rates market will be watchful for any hints that we might have already reached the peak in the hiking cycle.
While there is certainly cause for a softer tone, we highly doubt the Bank will be willing to go as far as ruling out further rate rises. That would see a rally in local rates, and only serve to fuel a rekindled housing market.
Later on, US GDP and German inflation readings will be the data highlights tonight.
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