After the 5bps increase in US 10-year rates post-FOMC, the market has range traded between 2.24-2.28% and currently sits flat at 2.27. Implied market pricing of a Fed hike by December sits just above the 60% mark.
RBA Lowe’s dovish speech has seen a 5-6bps rally in 3-year and 10-year Australian bond futures (ie, lower yields), unwinding some of the vicious price action seen in those contracts over the last couple of weeks. This could spill over into slightly lower NZ rates on the market open. There were only modest moves across the NZ yield curve yesterday, with the 2-year swap rate flat at 2.26% and the 10-year rate up 1bp to 3.29%.
Post-FOMC a number of Fed speakers hit the circuit from tonight, with Williams and George, ranked two of the most hawkish FOMC members according to Bloomberg’s hawk-dove spectrometer, followed by the neutral Kaplan tomorrow morning. Ahead of that it should be a fairly lacklustre trading session in NZ ahead of tomorrow’s election.