By Raiko Shareef
Interest rate markets took a back seat on Friday, largely moving in response to the explosive price action in other asset classes.
In New Zealand, the local session was complete before the Bank of Japan’s step-up in easing was announced.
With a dearth of market-moving data, NZ interest rate movements were subdued. There is continued interest to receive the mid-part of the curve, on the back of issuance activity. On the day, the short-end was supported by mortgage-book paying.
The outcome was some curve flattening, with the 2s10s down by 1 bp. The 2-year swap yield closed 1 bp lower at 3.87%.
Globally, bond yields were moved in response to the BoJ announcement. Japanese yields fell thanks to the prospect of a higher pace of central bank bond buying.
On the other hand, US Treasury yields rose as out-performing equity markets ignited some asset reallocation out of fixed income. The US 10-year yield rose 2 bps to 2.34%.
It is a big data week ahead, with plenty of top-tier releases. Highlights are likely to be the US labour market reports (Fri), the US ISM manufacturing index (Mon), and ECB President Draghi’s press conference following the central bank’s policy decision (Thu).
Other news:
* JP Sep CPI +3.2% y/y vs +3.3% exp.
* Euro-zone Oct CPI +0.4% y/y, as exp.
* US Sep personal spending -0.2% m/m vs +0.1% exp.
* US Sep PCE core deflation +1.4% y/y vs +1.5% exp.
* US Chicago PMI 66.2 vs 60.0 exp.
* US U of Michigan consumer confidence 86.9 vs 86.4 exp.
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