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Markets bid down wholesale interest rate swaps along with the NZD following RBNZ decision

Bonds
Markets bid down wholesale interest rate swaps along with the NZD following RBNZ decision

Following today's Reserve Bank OCR review, wholesale interest rates have fallen sharply.

In fact, the 1-5 curve has gone negative.

The 2-10 curve is just positive at only +7 basis points.

It is likely these moves will flow through to retail interest rates fairly soon if the changes hold.

That means,

- fixed mortgage interest rates will fall

- longer term home loan rates may fall faster

- term deposit rates will almost certainly now fall along with savings rates.

One consequence of the interest rate falls may be that a mortgage payment will support a larger loan. That in turn may boost offer prices on housing.

Another consequence has been that the New Zealand dollar has fallen. One NZ dollar is now worth US73.2 cents, a drop from US75c last night and down from US78c at the beginning of the year.

If that holds that will put upward pressure on the cost of imported goods.

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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1 Comments

looks like NZD  fx might be viewing this as a soft print option

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