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UST 10yr bonds traded in a 2.5 bps range, tending towards the bottom of the range at market close; NZ swap curve barely changed with 2yr rate at 2.205% and 10yr at 3.1350%; strong demand for 20yr NZ government bonds; local bond yields lower

Bonds
UST 10yr bonds traded in a 2.5 bps range, tending towards the bottom of the range at market close; NZ swap curve barely changed with 2yr rate at 2.205% and 10yr at 3.1350%; strong demand for 20yr NZ government bonds; local bond yields lower

By Jason Wong

Global bond yield movements on Friday were microscopic.  The US 10-year rate traded within a 2.5bp range, tending towards the lower end of the range towards the market close.  Relative to the NZ close it was down about 1bp to 2.14%. 

Two more Fed speakers (both non-voters) were on the circuit with opposing views.  Known hawk Mester told reporters after a speech that four months of softening inflation haven’t changed her outlook for the economy or her preference for continued gradual rate hikes. Uber-dove Bullard said the absence of inflation pressures gives the central bank scope for patience.

NZ’s swap curve barely changed, with the 2-year rate flat at 2.205% and the 10-year rate down 1bp to 3.1350%. 

There was more action in the bond market, with strong demand for the tender of NZ 20-year government bonds, the last auction for that particular bond for at least three months, seeing the yield fall for the day by 5.5bps to 3.27%.  With the government’s next nominal bond tender some four weeks away, a lack of forthcoming supply helped drag down rates across the curve.  Anecdotal evidence suggests good demand for NZ’s “high-yielding” government bonds.  The 10-year bond fell by 3.5bps to 2.725%.

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
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Source: NZFMA


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

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