NZ swaps closed down 1bps across the curve yesterday.
Overnight, US and German 10-year yields rose 10-13bps.
The NZ market showed little response to domestic data releases yesterday as it had its eye on the emergency summit on Greece last evening.
NZ 2 and 10-year swap closed down 1bps, at 3.06% and 3.87% respectively.
Overnight, there were big moves in bond markets. Although a firm deal was yet to appear from Greek negotiations with its creditors, comments were definitely sounding more positive.
Greece PM Tsipras had submitted a last-minute set of proposals that were described as “broad and comprehensive” by the Dutch Finance Minister. In addition, the European Commission President Juncker said “I’m of the opinion we’ll achieve an agreement with Greece this week”. Fingers crossed.
In the meantime, the market has responded with optimism. Greek 10-year yields have fallen around 1.5%, to below 11%. Italian-German spreads have fallen around 25bps, to 127bps.
‘Safe haven’ bonds have sold-off. German 10-year yields have risen 13bps, to 0.88%, while US equivalents have rebounded from 2.28% to 2.36%. The latter move was also supported by the release of stronger than expected US home sales data.
Expect some steepening of the NZ curve today, given these overnight moves.
There are no domestic data releases today, but the release of the June China manufacturing PMI has potential to influence sentiment early this afternoon.
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Kymberly Martin is on the BNZ Research team. All its research is available here.
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