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Wheeler comments give local yields a hockey-stick track ending higher and mirroring yield rises in the US

Bonds
Wheeler comments give local yields a hockey-stick track ending higher and mirroring yield rises in the US

By Raiko Shareef

Local interest rates experienced a bit of whiplash yesterday, opening lower after the RBA on Tuesday, but closing higher.

Offshore bond yields consolidated their gains.

NZ swap yields opened 7 bps lower in sympathy with their Australian counterparts, after the RBA cut its policy rate.

But in the wake of a strong local employment report and an RBNZ that suggested rate cuts are not imminent, yields more than reversed their initial losses.

Yields closed 3 bp to 9 bp higher, with the curve steepening as the long-end reflected a sell-off in US bonds.

The 2-year swap yield closed 3 bps higher at 2.56%.

Offshore, US 10-year yields are currently 2 bps higher for the day at 1.81%. US data were solid.

The ADP employment report showed a 213,000 gain against +223,000 exp, but upward revisions to the previous month more than offset the headline disappointment. The ISM non-manufacturing survey beat expectations at 56.7, also with upward revisions to past data.

It should be much more subdued in local rates markets, with no local data, and only Australian retail sales to watch out for in our session.

Other data:
* Euro-zone retail sales +2.8% y/y vs +2.0% expected.

 

 

 

Daily swap rates

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Source: NZFMA
Source: NZFMA
Source: NZFMA
Source: NZFMA
Source: NZFMA
Source: NZFMA
Source: NZFMA

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