US equity markets gained in the absence of economic data or other catalysts as the investors look ahead to key US inflation data and Fed Chair Powell’s testimony to US lawmakers later the week. The S&P is 0.7% higher in afternoon trading and there were decent gains for European equity indices with the Euro Stoxx advancing 0.6%. Global bond yields are modestly lower, and the US dollar was broadly stable against the major FX pairings.
Gold prices hit a record high above US$2900 per troy ounce amid ongoing accumulation by central banks and other market participants. Data released last week revealed that the Peoples Bank of China had added to its gold reserves for the third straight month. Prices are also being supported by geopolitical and economic uncertainty.
US treasury yields edged lower led by the front end of the curve. 2-year yields dipped 2bp to 4.26% in quiet market conditions. 10-year yields are unchanged at 4.49%. European bond markets were also subdued with 10-year bunds closing 1bp lower at 2.36%.
The US dollar was little changed against the euro and yen in offshore trade. The Scandinavian currencies outperformed within the G10 grouping with both the NOK and SEK gaining 0.5% against the US dollar. NZD/USD is little changed, and the NZD is stable on the major crosses.
New Zealand Debt Management launched the tap syndication of the May-2035 nominal line yesterday morning for pricing today. The deal timing was widely anticipated by the market after the syndicate panel was announced last week. The tap is expected to raise at least $3.0 billion and will be capped at NZ$6.0 billion.
NZ swap rates closed higher and steeper in the local session yesterday as pay side interest emerged following the syndication launch. The curve partially reversed the large curve flattening from Friday. 2-year rates fell 1bp to 3.45% while 10-year yields closed 5bp higher at 4.11%. 10-year NZGB yields largely matched the move in swaps closing 4bp higher at 4.60%.
There is no domestic data of note today. NAB Business Survey and Westpac Consumer Confidence are released in Australia. Bank of England governor Bailey is speaking following the 25bp rate cut last week. The meeting had two dissenters favouring a larger 50bp reduction.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.