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Offshore pressure drove NZ curves higher and steeper, but weekend data may see this reverse today. Key data due later in week

Bonds
Offshore pressure drove NZ curves higher and steeper, but weekend data may see this reverse today. Key data due later in week

By Jason Wong

Global bond yields diverged on Friday.

A less dovish ECB and discussions of future rate hikes put upward pressure on European yields, with Germany’s 10-year rate up 6bps to 0.48%.

After the US employment report, US Treasury rates fell across the curve, with the 2-year rate down 2 bps to 1.35% and the 10-year rate down 3 bps to 2.57%.

During NZ trading hours, US10s spent most of the time above the 2.60% mark.  While the rate got as high as 2.62%, there wasn’t any real follow-through and the fall in yields post non-farm payrolls means that the well-established 2.30-2.60% trading range seems secure for now.

Those global forces saw a higher and steeper NZ curve on Friday, with the 2-year swap rate closing up 1 bps to 2.36% and the 10-year rate up 4 bps to 3.645%.

The pressure today will be for much of that move to be reversed.

It’s a heavy economic calendar over the next 24 hours, but the key releases and events are later in the week.

Daily swap rates

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


Jason Wong is on the BNZ Research team. All its research is available here.

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