There were limited catalysts for global asset markets overnight in the absence of first-tier economic data or fresh guidance from policy makers. But eyes are on both the Fed minutes, and the keenly awaited Nvidia corporate results

There were limited catalysts for global asset markets overnight in the absence of first-tier economic data or fresh guidance from policy makers. The S&P is marginally lower in early afternoon trade as investors look ahead to Nvidia results due after market close. The company is at the vanguard of AI given its chips are used in the hardware for artificial intelligence. Treasury yields are marginally higher, and the US dollar is little changed.

Chinese equities performed strongly. The Hang Seng China Enterprises index increased more than 3% intra-day before closing 2% higher. The index is up 8% since mid-February. Chinese policy makers have adopted a range of measures aimed at boosting sentiment. The latest announcements clamped down on trading by quant funds, which have been attributed to market volatility, and tightened rules on short selling.

Eurozone consumer confidence improved in February amid falling inflation and strong labour markets. Confidence has picked up from the record low last year when the conflict in Ukraine resulted in an energy crisis. European bond yields traded higher on the day. 10-year bunds increased 6bps to 2.43%, reaching fresh highs for 2024.

US treasury yields are marginally higher across the curve. as the market looks ahead to supply. The Treasury is auctioning US$16 billion 20-year bonds this morning and US$9 billion of 30-year TIPS tomorrow. 2-year treasuries are up 2bps to 4.63% while 10-year years are also 2bps higher at 4.29%.

The US Dollar was modestly stronger against G10 currencies in quiet markets. The NZD reached the highest level in more than a month in the local session yesterday but slipped back overnight aligned with stronger US dollar. The NZD is little changed against the JPY and AUD and is weaker on the major European crosses.

NZ government bonds ended the local session higher lower in yield with the market focused on the syndication of the new May-2054 nominal bond. 10-year bond yields fell 3bps to 4.84%. The market rallied after the 2054 priced, with the curve flattening, as shorter bonds closed unchanged. Australian 10-year bond futures are ~4bps higher in yield overnight, pointing to a modest upward bias for NZ yields on the open.

The 2054 syndication saw strong demand with the orderbook at final guidance exceeding NZ$19 billion. New Zealand Debt Management issued NZ$4 billion which was previously indicated as the volume cap for the transaction. The 2054 was issued at a spread of +1bp to the May-2051 bond which was towards the tighter end of initial price guidance. The strong investor demand will support market sentiment given the heavy funding requirements ahead. The weekly NZGB tender is cancelled today, as is typical, following a syndication.

The minutes for the January FOMC are released this morning. There has been a plethora of Fed speakers since the meeting with a consistent message, so the minutes are unlikely to provide a great deal of additional information about the Fed’s policy outlook. Advance PMIs for February will provide an update on activity across major economies and are released later this evening.