Easing geopolitical tensions has seen higher global bond rates.
The US 10-year rate trended higher through the Asian trading session yesterday and rose about 3 bps on the strong retail sales report to as high as 2.28%, before settling down to its current level of 2.26%, up slightly from the NZ close and up 4 bps for the day. The combination of Dudley’s hawkish comments and the supporting US economic data has increased the probability of the Fed hiking by year-end to 42%.
Tomorrow morning sees the release of the FOMC’s minutes from the late-July meeting.
Upward pressure on rates via global forces saw rates up about 2-3 bps across the NZ swap curve, with the 2-year rate ending the day at 2.18% and the 10-year rate at 3.17%.
Upward pressure remained at the long end of the government curve, as the market nervously awaits a possible announcement by the DMO on syndication of the new 2029 issue.
The 10-year rate rose by 5 bps to 2.90%, taking the gain over the past two sessions to 11 bps against the 4 bp increase in the swap rate of equivalent maturity.
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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