By Kymberly Martin
NZ swaps closed up a further 1-4bps yesterday with a slight steepening bias.
NZ 2-year swap, at 2.98%, sits at the upper end of its year-to-date range, as we head into tomorrow’s RBNZ meeting. 5-year swap, at 3.57%, is approaching mid-February highs around 3.65%.
The recent push-up in swap yields has been assisted by some hedging interest from the ‘real’ economy.
Participants appear to be slowing coming round to the idea that RBNZ hikes will be a reality within the next 12 months.
The NZ 2-10s curve has moved up to 118bps, still well within the 95-125bps range we believe will hold for much of the year ahead.
Overnight, US and German ‘safe haven’ bonds that had been selling off, rallied through this morning.
US 10-year yields, that had touched as high 2.29% late last night, have returned to 2.18% currently.
Today, domestic card transactions data is unlikely to be market moving as all eyes remain focused on tomorrow’s RBNZ meeting.
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