US Treasuries have traded in a tight range overnight, with an upside bias since the US open.
There has also been a bias to steepen, with increase corporate supply hitting the market.
Bloomberg reports that at least 10 companies have slated bond offerings, 6 of which include 10-year and/or 30-year tranches. The 2-year rate is flat at 1.31%, while the 10-year rate is up 2bps to 2.50%.
Last night before the US open, yields fell a little as reports came through that Juppé would not replace embattled French Presidential candidate Fillon. However, this only had a temporary impact on global bond markets, with a retracement of that move, as European rates ended the session a few basis points higher. A similar blip was seen in EUR, but it wasn’t sustained.
In local trading yesterday, there was a slight upside bias to rates, but moves were less than 1 bp. The 2-year swap rate remained in the middle of a 2.30-2.40% range. We see that range largely holding until CPI data are released mid-April.
The next OCR review in late March is not expected to be market moving, with the RBNZ sticking to its playbook, albeit one which looks in need of refreshing, in our view, particularly the apparent equal risks around the OCR outlook.
The 5-year and 10-year swap rate closed at 3.02% and 3.55% respectively, close to the middle of recent ranges.
This afternoon sees the RBA cash rate review. No change to its neutral monetary policy view is expected. It is expected to be another uneventful trading session ahead, with few key releases on the economic calendar.
Daily swap rates
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Jason Wong is on the BNZ Research team. All its research is available here.
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