By Kymberly Martin
NZ yields closed down sharply on Friday and consolidated yesterday.
US 10-year yields pushed higher on Friday to close at 1.84%.
On Friday, in the absence of domestic data releases, NZ yields followed their offshore counterparts lower, in the wake of the surprise move by the Swiss National Bank.
The impact was felt most acutely at the long end of the curve. NZ 10-year swap closed down 8 bps, at 3.80%, while the yield on NZGB27s fell a massive 14 bps, to 3.39%. The entire NZGB curve is now almost completely flat.
With Wellington celebrating a regional holiday, there was little to note in NZ swaps yesterday, other than a period of consolidation. Meanwhile there was some sell-off in NZGBs following Friday night’s moves offshore. The yield on NZGB27s now sits around 3.47%.
US 10-year yields stepped higher on Friday night after the release of US Dec core CPI was followed by a stronger-than-expected Jan University of Michigan Consumer Confidence number (98.2 vs. 94.1 expected). From intra-night lows below 1.70%, US 10-year yields ended the week at 1.84% The US market was closed to observe Martin Luther King Day.
Yesterday, German 10-year yields slumped back toward their lows, now trading around 0.44%. Greek yields are pushing higher again, ahead of this Sunday’s General Election. 10-year yields are now back up at 9.39%, though below the level they reached in early Jan (10.68%).
Today’s domestic focus will be the release of the QSBO. This may serve as a reminder that despite low inflation readings, the NZ economy generally continues to perform very well.
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