There has been a little more price action in the bond market, but not much more.
Europe has remained in the driving seat. After selling off 10 bps last week and 22 bps the previous week, some buyers have emerged for Germany’s 10-year bunds, with the yield dropping 3 bps to 0.54%. It has been a similar theme across the rest of Europe, with UK and French 10-year rates also down 3 bps, and this dynamic has helped support US Treasuries.
The US 10-year rate has traded in a tight 2.36-2.39% range and sits 1.5 bps lower at 2.37%. The price action might mean little more than a temporary respite from the recent global rates sell-off.
Lower yields have lent some support for equity markets but movements have been modest. The S&P 500 is currently up 0.2%, following a 0.4% gain in the Euro Stoxx 600.
NZ rates were 1-2 bps higher across the swap curve yesterday, with the 2-year rate up to 2.33% and the 10-year rate at 3.43%.
The economic calendar picks up a bit, but the releases ahead over the next 24 hours are second-tier, so it should be another quiet trading day. A couple of Fed speakers, Williams and Brainard, are in the mix, but their views have been recently aired elsewhere. Fed Chair Yellen’s testimony to Congress Wednesday night NZ time is the key focus this week and we’ll provide more colour on that tomorrow.
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Jason Wong is on the BNZ Research team. All its research is available here.
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