There’s little [action] on the bond market. The US 10-year rate has drifted up just over a basis point since the NZ close to sit at 2.19%, still around the lower end of its trading range of recent months, as the market keenly anticipates some guidance from Yellen and Draghi tonight.
The Jackson Hole symposium has previously resulted in market moving speeches by Central Bank heads, that isn’t always the case. Sources suggest that the ECB’s Draghi’s speech will steer clear of any major policy announcement, while Fed Chair Yellen’s speech will be focused on financial stability.
Last week the Fed’s Dudley commented that rising asset prices suggested the Fed likely needed to do more to tighten financial conditions. If Yellen echoes these thoughts then that could help lift US rates and support the USD.
Movement in the NZ rates curve has remained minimal all week. The 2-year swap rate was flat at 2.18%.
The closing level hasn’t budged more than 1 bp over the past week and a bit. The 10-year swap level fell by 2 bps to 3.14%, remaining tightly range-bound for the past few weeks. Reporting that nothing happened is becoming more tedious by the day. Let’s hope for a bit more volatility ahead.
If Trump stays quiet then trading over the next 24 hours should be uneventful, with more scope for volatility when the Yellen and Draghi speak at Jackson Hole on Fridaynight/Saturday morning.
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Jason Wong is on the BNZ Research team. All its research is available here.
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