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Bond markets grow weary of Greek impasse. Hopes for deal fading. Yields rise as risks rise. Local eyes on LVR data

Bonds
Bond markets grow weary of Greek impasse. Hopes for deal fading. Yields rise as risks rise. Local eyes on LVR data

By Kymberly Martin

NZ swaps closed up 1-2bps yesterday, in the absence of domestic data releases.

Overnight, US 10-year yields traded between 2.37% and 2.41%

There was not too much movement in the NZ market yesterday.

NZ 2-year swap closed at 3.10%. The market prices around 45 bps of further rate cuts from the RBNZ in the year ahead and places around a 75% chance on a cut at the July 23 meeting. We expect the Bank to cut at that meeting.

By comparison, the market prices around a 60% chance of a cut from the RBA within the year ahead. The RBNZ and RBA cash rates currently sit at 3.25% and 2.00% respectively.

Overnight, markets seemed weary as Greek negotiations dragged on.

The tone has turned less optimistic as the German Finance Ministry spokesman said that “there’s still a long way to go” to find a deal. The Greek Government rejected the latest bailout terms set by creditors. Ahead of another long night of negotiations German yields have slipped while Greek yields have ticked up. The yield on Greek 10-year bonds now sits at 10.80%.

US yields traded fairly tight ranges on relatively low volumes. From intra-night highs above 2.41%, US 10-year yields now trade at 2.37%.

Today’s release of high LVR ratio loans may gain some attention domestically, given the recent emphasis on measures to address NZ’s housing imbalances. This evening there are a number of ECB members scheduled to speak independently of ongoing Greek negotiations.

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Kymberly Martin is on the BNZ Research team. All its research is available here.

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

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1 Comments

The Greek crisis is a circus and i blame the Greek government for not making a firm stand from day one.

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