by Kymberly Martin
NZ swap and bond yields closed down 2-6bps yesterday. Overnight, positive US data surprises saw US yields rise.
NZ swap yields declined across the board yesterday, with a flatter curve. 2-year swap yields closed at familiar levels just below 2.90%.
The market continues to price around a 50% chance of a 25bps rate hike form the RBNZ in the year ahead. 10-year yields closed down 6bps at 4.30%.
The NZ bond auction attracted decent, though not overwhelming, demand. It had an average 2x bid-to-cover ratio. The 100m of NZGB 19s went at 3.72% and the 50m of 23s at 4.15%, close to levels they later closed at.
Across the Tasman, the strong employment data (unemployment 5.1% vs. 5.3% expected) saw AU short-end yields surge higher. However, they gave up much of the rise later in the day. NZ-AU 3-year swap spreads declined from -116bps to -121bps.
Overnight, markets continued to be jostled by the usual array of headlines regarding the progress, or lack thereof, in the Greece/troika negotiations.
However, “safe-haven” US and German yields sold off in the early hours of this morning after better-than-expected US data.This saw US 10-year yields surge from 1.91% to 1.98%.
In the day ahead there are no NZ data releases.
Expect NZ long yields to follow their offshore counterparts higher, particularly if there is any confirmation on progress in Greek aid negotiations.
No chart with that title exists.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.