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Overseas action rather than Wheelers speech driving yields lower; US data sees treasurys trade off lows

Bonds
Overseas action rather than Wheelers speech driving yields lower; US data sees treasurys trade off lows

By Kymberly Martin

NZ swaps closed down 1-3bps and NZGB yields down 1-4bps yesterday. Overnight, US 10-year yields traded between 1.53% and 1.57%.

The prompt for the downshift in NZ yields appeared to come from offshore moves the previous night, rather than the Reserve Bank Governor’s speech yesterday morning. The speech specifically stated it was drawing heavily on, and emphasising the message contained in, the August MPS, so was clearly not designed to move market pricing.

The market continues to price slightly less than a 20% chance of an OCR cut next month. It now prices a trough OCR around 1.58% within the year ahead. NZ 2-year swap closed for the day at 1.99% and NZ 10-year at 2.44%.

We continue to look for the launch of the NZDMO’s new NZGB 2037 in coming days. Despite the recent sharp sell-off in longer-dated NZGBs in anticipation of this event, they managed a moderate rally yesterday. The yield on NZGB 2033s closed down 4bps, at 2.62%.

US 10-year yields made evening highs near 1.57% before drifting lower into the early hours of this morning. However, they traded off their lows after US new home sales data came in well above expectation and the global oil price also jumped higher this morning. US 10-year yields now sit at 1.55%.

Daily swap rates

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Opening daily rate
Source: NZFMA
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Source: NZFMA
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Source: NZFMA
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Source: NZFMA
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Source: NZFMA
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Source: NZFMA
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Source: NZFMA

 

 


Kymberly Martin is on the BNZ Research team. All its research is available here.

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