By Raiko Shareef
US interest rates rose sharply overnight, despite continued weakness in US data.
Local interest rates ignored the gains made across the Tasman, and instead drifted sideways ahead of tomorrow’s RBNZ meeting.
The soft US consumer confidence and Richmond Fed readings had only a fleeting impact on US Treasury yields.
On the ascent before the data releases, the knee-jerk dip in yield was very quickly reversed, and the 10-year yield is up 6 bps for the day at 1.98%.
There does appear to be some element of position-squaring ahead of the Fed meeting tomorrow morning. The rates community has long been sceptical about the prospect of near-term rate hikes, but seem wary of a hawkish surprise. That outcome seems unlikely.
Locally, interest rates markets saw a fairly subdued session.
The 2-year swap yield edged back by 1 bp to 3.52%, a move at odds with the gains seen in Australia. There, interest rates gained sharply as bets on imminent RBA rate cuts continue to be pared. The Australian 3-year swap yield closed 5 bps higher for the day.
Today’s trade balance and business confidence data are unlikely to materially impact markets, ahead of the FOMC and RBNZ double-whammy tomorrow.
Ahead of that, German inflation data and the US GDP report will be watched closely.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.