By Kymberly Martin
NZ yields pushed up 2-7 bps across the curve yesterday as general market sentiment improved.
Overnight, US 10-year yields traded a tight range, to sit at 2.41% currently.
After the improvement in market sentiment on Friday night and over the weekend, NZ yields pushed higher from the open.
The recent trend of domestic paying continues to be felt. NZ 2 and 5-year swap closed at 4.07% and 4.44% respectively. The 2-10s curve steepened to 64 bps.
Meanwhile NZGB yields pushed 6-7 bps higher, with the yield on NZGB23s closing at 4.22%.
A heavy week of issuance ahead, likely also contributed to the rise in yield. The DMO will offer $200m of nominal bonds at this Thursday’s auction.
The LGFA will also tender $285m of bonds tomorrow, including $110m of a new 2020 bond. We anticipate solid demand for the new bond, but potential for up to a 5 bps range of successful bids, as the market weighs everything from global rates risk to relative value. Our mode-derived ‘fair value’ sits at 4.76%, or 24 bps relative to swap.
Overnight, in the absence of major data releases, or additional negative geopolitical headlines, equity markets rebounded.
A speech by US Fed Vice-Chair, Fischer gained attention. He said he believed potential growth in both the US and globally may have suffered long-term damage. This is consistent with recent market debate that has contributed to the decline in US long-term yields.
Overnight, US yields traded fairly tight ranges. US 2 and 10-year yields sit at 0.44% and 2.41% respectively, with the latter still close to year-to-date lows.
There are no domestic data releases today. The focus today will be the AU business confidence survey and tonight the German ZEW survey.
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