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NZ wholesale rates struggle to find direction ahead of Fonterra payout announcement; Aussies still eyeing rate cuts in 2015

Bonds
NZ wholesale rates struggle to find direction ahead of Fonterra payout announcement; Aussies still eyeing rate cuts in 2015

By Kymberly Martin

In a quiet day of trading NZ swaps closed up 1-2 bps across the curve. US 10-year yields trade at 2.28% this morning.

The push up in NZ yields yesterday followed on from Friday night’s payrolls led rise in offshore yields.

However there appeared little enthusiasm in the move. NZ 2-year swap closed up 1 bps at 3.86%, while 10-year closed up 2 bps at 4.32%. The 2-10s curve now trades at 46 bps.

The LGFA (Local Government Funding Agency) announced the details of its final tender for the year, to take place on Wednesday. It will issue NZ$15m of 2017s, NZ$20m of 2019s, NZ$25m of 2020s and $75m 0f 2023s.

Overnight, in fairly subdued markets, and only light data flow, US 10-year yields pushed toward 2.35% in the late evening before drifting off to 2.28% this morning. German equivalents subsided from evening highs above 0.78%, to trade at 0.72%. US-German 10-year spreads are close to historic highs.

Today, all eyes will be on the lookout for Fonterra’s 2014/2015 payout announcement which is due any day. A softer than expected number (low $4s) could result in a knee-jerk dip in short-end NZ swaps. Otherwise, NZ card spending data is due today.

Across the Tasman the NAB business confidence survey is due along with the independent review of the ABS labour force survey that has been somewhat volatile of late. This is timely, ahead of Thursday’s latest release of the survey.

These two releases should be the main influences this week on market expectations for future RBA activity. The market currently prices around 30 bps of cuts by Q3 next year.

 
 
 
 
 
 
 
 
 
 

Daily swap rates

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Source: NZFMA
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Source: NZFMA
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Source: NZFMA
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Source: NZFMA
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Source: NZFMA
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Source: NZFMA
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Source: NZFMA

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