Many US Fed officials speaking but Fischer's TV slot saying two more due in 2017 boosts markets. UST yields rise. Local rates may see upward pressure as a result

By Doug Steel

There has been lots of Fed speak over the past 24 hours but no change of tone.

Fed Chair Yellen didn’t comment directly on monetary policy overnight but did note pockets of ‘persistently high’ unemployment remain within the context of overall economic recovery.

The Fed’s George and Kaplan covered a lot of ground but ultimately talked of gradual removal of accommodation.

Most direct, and most important, was Fed Vice Chairman Fischer speaking on CNBC saying two more rate hikes seems to be about right for 2017. This says that the Fed’s current plan remains on track. Fischer’s comments added gusto to the USD bid and added more support to US yields.

US Treasury yields were already in the ascendancy across the curve on the run of better than expected data but got another shunt higher following Fischer’s comments. From lows of just under 2.36%, the 10-year yield pushed up through 2.41%, and back to around where they closed at the end of last week and still well within a familiar 2.30% to 2.60% range.

NZ yields consolidated yesterday, following the offshore-inspired dip on Monday. There was no follow through yesterday.

The NZ 2-swap and NZ 5-year swap yields edged marginally higher but continued to linger near the bottom of their recent trading ranges at around 2.31% and 2.91% respectively.

Some further upward pressure seems likely today, given offshore moves.

There is little on the data calendar to excite markets today, so the triggering of Article 50 will no doubt hold attention with focus on response from across the channel.

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