By Kimberly Martin
NZ swaps closed down 2-3bps across the curve. Overnight, US 10-year yields traded tightly around 2.78%.
The NZ market was fairly quiet as it awaits the RBNZ’s meeting tomorrow.
NZ 2 and 5-year swap both closed down 2bps at 3.92% and 4.56% respectively. The 2-10s swap curve still remains not far from its lows since June last year, at 115bps.
Yesterday the Bank of Japan kept its target rate unchanged, as expected. There were no new measures announced after last month’s increase and extension of the lending program. The Bank of Japan continues to see a moderate recovery.
Overnight, in the absence of key data releases, as equity markets remained fairly flat, US 10-year yields bobbed around 2.78%.
Today, no domestic data is scheduled so the market will remain firmly focused on tomorrow’s RBNZ meeting.
Heading into the meeting the market is pricing almost 100% chance of a 25bps hike and around 175bps of hikes in the coming two years. We see 250bps of hikes over this period, taking the OCR to a cyclical peak of 5.00%.
Of great interest tomorrow will be the RBNZ’s published 90-day bank bill track. Recall, in the December MPS this implied the OCR at 4.50% at the end of its forecast period, (March 2016), but still on an upward trajectory.
Across the Tasman today, the AU Westpac consumer confidence survey will be released. Otherwise it’s a low-key day for offshore data.
No chart with that title exists.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.