NZ interest rates continued to steepen modestly on Friday, while US curve flattened a touch as risk appetite continues to improve.
The local market lacked for data drivers out of NZ and Australia on Friday, instead taking its cues from the modest sell-off in US bonds the night earlier.
The NZ 10-year swap yield crept 3 bps higher. The shorter end of the curve was kept contained, despite positive trading in regional equity markets.
As a result, the 2s10s curve steepened 3 bps to 81 bps.
Offshore, US interest rates initially sunk lower ahead of the Fed’s annual Jackson Hole Symposium, where investors might have anticipated some notes of caution about the prospect of near-term rate hikes, given the market turmoil of late.
As it happened, the commentary was fairly balanced, and the 18 September meeting remains ‘live’.
US short-end interest rates have recovered completely from the falls they suffered as a result of recent risk aversion. The 2-year swap yield closed at 0.72% on Friday, having been as low as 0.54% earlier in the week.
It’s a busy week of releases, especially in Australia. The RBA meeting (Tue) and Q2 GDP (Wed) will be highlights. Locally, we look to today’s building consents and ANZ business confidence survey to set the tone. And of course, the focus will be on the US employment reports on Friday.
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Raiko Shareef is on the BNZ Research team. All its research is available here.
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