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Solid data and improving risk sentiment pushes up oil prices and global yields. Markets price in a US Fed hike. Expect local yields to rise today

Bonds
Solid data and improving risk sentiment pushes up oil prices and global yields. Markets price in a US Fed hike. Expect local yields to rise today

By Doug Steel

Solid economic data, adding to positive risk sentiment and higher oil prices have seen global yields push higher.

The US 10 year Treasury yield is up about 3bps to nearly 2.28%.

Fed speakers over the past 24 hours haven’t given a clear-cut signal for a June Fed hike, but the lack of the opposite seems enough for the market to largely price in a hike next month.

Pricing for a June Fed hike has nudged back above 80%.

Little extra information is anticipated from the Fed Minutes overnight, with focus on the numerous upcoming Fed speakers to gain any latest insight (including Harker at 9am this morning NZT).

NZ yields edged a little lower yesterday with swap yields down about 2 bps across the curve. We would expect some upward bias with steepening pressure today, given offshore moves.

We are not expecting to hear anything from RBNZ Governor Wheeler’s speech in Hamilton today, given it is not public.

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


Doug Steel is a senior economist at BNZ Markets. All its research is available here.

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