By Kymberly Martin
It was a very quiet day in NZ markets with no domestic data for direction ahead of the night’s US payrolls data.
NZ swap and bond yields closed up 1-2bps across the curve. The market prices around an 85% chance of a first OCR hike in March next year and 100bps of hikes in the year ahead.
There is little on the domestic data agenda to substantially change that view ahead of next Thursday’s RBNZ meeting.
In the meantime, the market will continue to look offshore for direction. Overnight, US non-farm payrolls came in below expectation (148K vs. 180K).
The response from US Treasuries was abrupt. US 10-year yields gapped from 2.58% before settling around 2.52%. AU bond futures followed almost in lock-step.
Expect NZ yields to open down today, with a flattening bias to the curve. There is nothing scheduled on the domestic agenda today, but all eyes will be across the Tasman where Q3 CPI will be released.
Tonight the Bank of England releases its MPC Minutes. The US issues MBA mortgage application and house prices data. These will remain of interest for the market and the US Fed looking for signs of the impact of recent rises in US mortgage rates.
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