By Kymberly Martin
NZ swaps pushed higher by 3-4bps across the curve yesterday.
Overnight, US 10-year yields drifted a little lower, to 2.59%.
The key news domestically, yesterday, was the DMO’s announcement of its syndicate for the issue of a new NZGB2027 bond.
The DMO has previously indicated the issue will occur in the 2014/2015 fiscal year. It intends to issue $1-2 bln subject to market conditions.
The imminence of this new long-end supply assisted curve steepening on the day.
The yield on NZGB23s pushed 2bps higher to 4.46%. 10-year swap pushed 4bps higher to 4.90%.
The push higher in swaps may also have been assisted by a lull in the recent flurry of Kauri SSA issuance (which lends receiving demand to the market).
We continue to see hedging value in 2-4-year swaps. We see current ‘fair value’ on 2-year swap around 4.40%, some 20bps above current levels. 5-year swap sits at 4.58%.
Overnight, the US released consumer confidence and home sales data that beat expectations. However, the response by US yields was fairly modest. Overall, there was a generally drift lower in yields, with 10-year sitting at 2.59% this morning.
Today, there is no data scheduled for the domestic market. This evening, US durable goods and the latest reading of US Q1 GDP will be released.
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.