US economic data remained smoking hot, with US consumer confidence rising to an almost 17-year high, both jobs plentiful and jobs hard to get indexes back to levels last seen in the early 2000s, and strong Chicago PMI data.
The private sector component of the employment cost index rose to a new cycle high of 2.5%. None of it moved the market, with month-end flows more of a force in the currency market.
There is also focus on the US tax bill due later this week and said to be 90% written, while Trump announces his pick for the new Fed Chair later this week.
US 10-year rates traded in a tight 2.36-2.38% range and are up less than 1 bp to 2.37% from the NZ close.
The BOJ kept rates and policies on hold while slightly lowering its inflation forecasts. Nothing new there.
The NZ rates curve was dragged down by lower rates in the previous overnight US session. The 2-year swap rate fell 1 bp to 2.15% while the 10-year rate fell by 5 bps to 3.15%.
Today sees the release of NZ employment and wage data. The unemployment rate is expected to drop to 4.7%, the lowest rate since 2008, while wage inflation is expected to kick higher.
These data will help set the tone for next week’s RBNZ MPS, which already also has to consider the weaker NZD, higher oil prices, a much higher minimum wage track over coming years, much easier fiscal policy and the higher starting point for inflation.
US ADP employment and ISM data tonight will be followed by the FOMC announcement at 7am tomorrow morning, with little change expected in the text, which keeps alive the prospect of a December hike.
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Jason Wong is on the BNZ Research team. All its research is available here.
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