By Kymberly Martin
On Friday, NZ yields reversed some of their previous day’s moves with swaps closing up 2-3 bps across the curve and bonds up 5 bps.
In the run-up to Friday night’s US payrolls data, the general direction for NZ yields was higher. Longer-dated swap and bonds rebounded from range lows. The yield on NZ 10-year swap closed the week at 4.55%.
Meanwhile 2-year swap inched higher within its now well-established range of the past three months. It closed the week at 4.07%.
On Friday night, US yields initially popped higher on the back of the better than expected September non-farm payrolls data (248K vs 215 expected).
However, the detail showed that wage pressures remained subdued. Hourly earnings were flat on the month, taking the annual growth rate down to 2.0% from 2.1%.
US 10-year yields popped from 2.44% to above 2.48% before drifting off to 2.43% by week-end.
The benign combination of solid employment numbers but contained bond yields appeared to boost equities. The S&P 500 closed up 1.1%.
It looks to be a relatively quiet start to the local week with a Labour Day holiday in much of AU, and only NZ QV house prices due domestically.
The domestic focus for the week will be tomorrow’s Quarterly Survey of Business Opinion. We expect this to be fairly robust even as it straddles the General Election.
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