In the bond market the US 10-year rate is on track to record its narrowest monthly range since 1979, maintaining a 2.30%-2.42% range for the entire month, with only a few hours remaining. This is about one-third of the average range of the past five years.
We’re currently sitting at the top of that range at 2.42%, up 3 bps for the day and through the strong resistance level of 2.40%.
The PCE deflators were in line with expectations.
Germany’s 10-year rate was down 2 bps to 0.365% after the lower than expected euro-area inflation data.
NZ swap rates were little changed across the curve yesterday, while government bond yields were down 1-2 bps. That was a strong performance in the context of the upward pressure from US rates in the previous overnight session.
As noted, there was little reaction to the ANZ survey, with the rates market well on track to outperform ahead of the release of that survey.
At the local close, the NZ-US 10-year bond spread was down to a skinny 34 bps, the lowest since 1993.
This reflects a scarcity of NZ bonds until the new government winds up the spending machine from next year and the out of sync US/NZ monetary policy stances.
There’s plenty on the economic calendar ahead with the US ISM release tonight the most noteworthy.
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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