In the bond market higher UK bond yields spilled over into German and US rates, with higher risk appetite supporting the move.
Germany’s 10 year rate rose by 6 bps to 0.40% while the US 10-year rate is up 4 bps to 2.17%, now 16 bps higher than Friday’s intra-day low.
Fed Fund futures are back to pricing in about a 1 in 3 chance of a hike by year-end but one still has to look beyond 2018 to see the next full rate hike priced in.
It’s not all bad news in the bond market. Austria sold €3.5 bn of 100-year bonds priced at just 2.11%, the largest century bond to hit the market, with bids totalling €11.4bn.
NZ’s rates market performed well yesterday. Receiving interest in the swaps market was prevalent all day and the swap curve showed little change in yield despite the upward pressure to rates from global forces.
A 5-year Kauri from the World Bank was announced, adding to the receiving theme. Upward pressure from global forces will continue today.