The movement in UST yields is a bit of a mystery.
The 10-year yield continued to track higher during the local and Asian trading session on no fresh news, reaching a fresh high of 2.37% last evening, before beginning to fall.
Reports of a shooter in Las Vegas were beginning to hit the screens at that time and we’re not sure if that was behind the reversal. This morning it is sad to read that the event was the deadliest mass shooting in modern US history.
Some support in yields was reached around the low of 2.32%, before ticking 1 bp higher after the strong ISM report. The current yield is 2.335%, down around 2 bps from the level at the NZ close.
The local rates market was dead yesterday, given the Australian holiday. There was a slight uptick in rates at the long end of the curve of about 2 bps, as yields were marked higher as UST yields drifted higher.
Today’s NZ QSBO isn’t expected to be a market mover and neither is the RBA’s statement later this afternoon.
The RBA is expected to maintain a neutral tone, despite recognition of a slightly better economic outlook.
Tonight sees another GDT dairy auction, and with whole milk powder future prices rising recently, it is expected to show positive price momentum.