By Kymberly Martin
There was a slight steepening of the NZ swap curve yesterday, but otherwise it was a relatively quiet day.
Overnight, US 10-year yields moved down to 2.74%.
NZ 10-year swap closed up 3bps while 2-year was relatively flat, resulting in a slight steepening of the NZ swap curve to 129bps.
There was greater drama across the Tasman. Following the weaker than anticipated employment report, AU short-end yields gapped lower.
AU 3-year swap gapped from around 3.26% to below 3.16% on the data before settling around 3.18%.
NZ-AU short-end swap spreads widened as a consequence.
However, the market has only slightly inched up its pricing of a rate cut from the RBA in the year ahead (to a 15% chance).
Overnight, US 10-year yields opened higher but drifted lower over the course of the night, assisted by a disappointing (-0.4%m/m vs 0.0% expected) January retail sales number.
Yields sit just below 2.75% this morning, mid the 2.50-3.00% range we see for the months ahead.
It will be a fairly quiet end to the week on the domestic front with only NZ food prices scheduled for release today.
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