US Treasury rates have traded in a tight range, with the 10-year rate down a touch to 2.29%.
Clearly, the market isn’t giving much weight to the “massive” tax cuts and prospect of rising fiscal deficits and debt.
To see a major reaction in Treasuries the market will need to see more detail and have confidence that easier fiscal policy will get through the Washington gridlock.
The lack of a more hawkish tone from the ECB helped drive German 10-year rates down 6 bps to 0.29% and this likely had some spill-over impact into the US market.
There were only small changes to NZ swap rates yesterday, with movements all within 1 bp.
There was slightly more movement in the bond market. The DMO’s tender of $150m 2037 bonds met strong demand with a bid-cover ratio of 3.3. The 20-year bond closed the day down 2 bps to 3.58%.
The calendar ahead is action packed again as the table suggests.
US Q1 GDP will be the focus, where a soft result around 1.0% annualised is anticipated.
Daily swap rates
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Jason Wong is on the BNZ Research team. All its research is available here.
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