US 10-year Treasury rate has traded a 2.80-2.83% range, now well up from the 2.72% low seen earlier this week; NZ rates followed global rates higher, along with some curve steepening

By Jason Wong

The better risk tone sees global bond rates slightly higher. 

The US 10-year Treasury rate has traded a 2.80-2.83% range, now well up from the 2.72% low seen earlier this week. 

Tonight sees the key US employment report.  The market expects solid employment growth (+185k, weighed down following super-sized weather-related gains in the previous two months) , a fresh low in the unemployment rate to 4.0% and average hourly earnings ticking higher to 2.7% y/y.  All this would be consistent with the Fed continuing along its path of policy tightening, albeit the next rate hike is not expected until mid-June. Fed Chair Powell will be speaking overnight after the employment report.

Overnight, the Fed’s Bostic (voter) said that he sees PCE inflation hitting the Bank’s 2% target in the next quarter or two and “I am actually very comfortable going above 2% by some amount…2.2%, 2.3%...I don’t think that is a crisis of overheating”, reiterating the common refrain from the FOMC that the inflation target is symmetric, or an average and not a ceiling.

Yesterday, NZ rates followed global rates higher, along with some curve steepening.  The 2-year swap rate was flat at 2.25% while 5 and 10 year rates rose by 2-3bps.

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