By Kymberly Martin
NZ yields closed down 4-6bps yesterday. Yields moved lower across the board after the resignation of Summers as a prospective candidate in the US Fed chairmanship race. This increases the probability the role will fall to Vice-Chair Yellen.
She is widely regarded as ‘dovish’ and likely to pursue similar policies as Bernanke that prioritise the employment prong of the Fed’s dual mandate.
NZ swaps closed down 4-6bps though there still seems to be paying interest coming through at the short-end. A mortgage curve that is still fairly flat at the short-end may be encouraging some fixing.
2-year and 5-year swap closed at 3.53% and 4.50% respectively.
The yield on NZ 10-year bonds closed at 4.77%. Spreads to AU and US equivalents are attractive at 77bps and 199bps respectively.
This may help foster some demand at this Thursday’s DMO auction. However, the outcome of Thursday morning’s US FOMC meeting will be crucial in setting the tone toward bonds generally.
Overnight, benchmark US 10-year yields opened down 8bps at 2.80%. Yields then drifted higher over the course of the night although without gaining much momentum as US data was on the soft side of expectation (Empire Manufacturing, Industrial Production). Yields have risen to sit around 2.85%.
Today there is no domestic data scheduled. Across the Tasman the focus will be the release of RBA Minutes.
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1 Comments
She [Yellen] is widely regarded as ‘dovish’ and likely to pursue similar policies as Bernanke that prioritise the employment prong of the Fed’s dual mandate.
Hmmmm .... “For my own part,” Ms. Yellen said, “I did not see and did not appreciate what the risks were with securitization, the credit ratings agencies, the shadow banking system, the S.I.V.’s — I didn’t see any of that coming until it happened.” Her startled interviewers noted that almost none of the officials who testified had offered a similar acknowledgment of an almost universal failure. Read more
Yet another ill informed career bureaucrat lining up to clip a larger government salary ticket..
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