By Kymberly Martin
The NZ swap curve steepened slightly yesterday.
Overnight, US 10-year yields traded between 2.69% and 2.73%.
There was not too much movement at the short-end of the NZ curve. Offshore receivers appear content to continue to absorb payside flow emanating from domestic borrowers.
2-year swap closed at 4.00%, while 10-year closed up fractionally at 4.91%.
NZ bonds remain well bid. The yield on NZGB23s has slipped a further 2bps to 4.41%.
The spread between this bond and the equivalent swap has therefore widened to 43bps.
Overnight, in the backdrop of positive equity markets US Treasury yields were fairly range-bound. The yield on 10-year bonds briefly pushed up toward 2.73% before returning to trade at 2.70%.
Fed fund futures continue to price the US Fed will raise rates from early 2H next year.
Today, brings the domestic data highlight of the week, in the form of the ANZ business survey. Pricing intentions variables will be key to watch. Otherwise NZ rates will continue to take their cue from offshore.
Tonight the US ADP employment report will be delivered which is often seen as a precursor to Friday’s all-important US payrolls report. The advanced reading of US Q1 GDP will also be released and the US FOMC will announce its decision.
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