By Kymberly Martin
There was modest follow through by the NZ market after the post-payrolls rally in bonds offshore.
NZ swap yields closed down 1-3bps across the curve. NZ bond yields closed down 3-4 bps.
The downward shift in NZ yields yesterday was precipitated by Friday night’s offshore moves. Still the market seemed reluctant to push yields too much lower ahead of today’s QSBO release.
The survey will likely show now widespread optimism and NZ growth momentum.
More important will be any insights it gives to capacity pressures and pricing intentions.
Ultimately the RBNZ will not respond to growth per se but to perceived resulting price pressures.
Yesterday, 2-year swap closed at 3.79% and the 2-10s curve at 137 bps, its flattest level since mid-August. NZ 10-year bond yields closed down 5 bps at 4.66%.This resulted in 10-year swap-bond spreads pushing wider to 44 bps.
Overnight, in the absence of key data releases, US benchmark 10-year yields continued to drift lower, continuing their post-payrolls decline. Yields trade at 2.83% this morning, their lowest level since mid-December. We continue to see a 2.5-3.0% range in the year ahead.
Today, the domestic highlight will be the QSBO although electronic card transactions will also be released.
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