by Kymberly Martin
NZ swap yields pulled back 4 -5bps yesterday.
Overnight, demand for “safe haven” US and German long bonds rose, seeing their yields slump.
NZ swap yields declined yesterday, but still remain comfortably in their range of consolidation over the past few weeks. 5-year swap yields closed down 5bps at 3.73%, within the 3.67% to 3.83% band they have recently traded. 2-year swap yields closed down 3bps at 3.05%.
Ahead of tomorrow’s RBNZ meeting the market continues to price around 25bps or rate hikes from the Bank in the year ahead.
NZ bond markets were very quiet with yields closing almost unchanged. Swap-bond spreads closed down around 6bps.
The spread between 10-year swaps and an equivalent bond now sits around 26bps.
Overnight, as risk appetite collapsed US 10-year yields slumped from 2.02% to 1.94%, and German equivalents from 1.83% to 1.78%. Non-core European yields surged higher. For example, Italian 10-year yields moved up from 4.93% to 5.07%.
Expect NZ long-end yields to open down today, given the damage to market sentiment and equity markets overnight. The short-end should be more range-bound ahead of tomorrow’s RBNZ meeting.
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.