By Kymberly Martin
NZ swaps closed up a further 3-4bps. Overnight, US 10-year yields attempted another assault on the 2.0% level.
Since early December, NZ short-end swap yields have stealthily moved 40bps higher. 2-year swaps have moved from 2.55%, to close at 2.95% yesterday.
While a return to the December bottom of the trading range now looks less likely, it is difficult to see the imminent catalyst for a significant further rise in yields. But complacency should be avoided.
The market now prices an 80% chance of the OCR being 25bps higher in 12 months’ time. This is the highest expectations have been since April last year.
We continue to expect a first hike in December, with steady hikes throughout 2014. We see a 4.50% peak in the OCR in early 2015.
The 2-10s swap curve has steepened a little further to 113bps. Save a surge higher in US long-yields (that would drag up NZ long-yields) we would look to reposition for curve flattening as we approach 120bps.
Overnight, US 10-year yields attempted another break higher, this time touching above 2.02% before slipping back to 2.0%.
Today’s BNZ PMI will be released. December’s reading inched up to 50.1. A reading for January above 50 would show the manufacturing sector remains in expansion despite currency headwinds.
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1 Comments
What is needed is pushing down the lowest cost of living (basic staples), many of these things are not preferred by wealthy folk and it would allow more discretionary funds for those chosing lower cost of living (for whatever reason, and allowing choice fairly to all teirs of the financial spectrum). Give the people their corn, so that they may earn their cake.
Nice sentiment - unfortunately some aspects impinge upon all our lives.
I was discusiing, with a local friend, the financial merits of hosting a web site @ home versus paying a third party to do so.
After some blog discussions with US parties he sent me this email:
Hello
I was just reading about the cost of running a server at home. With an
existing machine, power is by far the largest cost.
Our power is costing NZ$0.31 /unit. These guys in the US are currently
paying US$0.066 to US$0.08 /unit.
That's a big difference.
A couple of interesting notes:
My existing security video DVR (a P4 2.8G DELL) draws just over 100
watts. The new one (no installed yet) draws about 40 watts. A reduction
from $271 to $108 per year.
Hot water: To consume $100 worth of power/month at $0.31/unit, a 2.2KW
hot water element must run for 4.88 hours per day every day.
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