Despite a small rise in the US, yields are generally lower around the world, including in New Zealand. Focus turns to US Q2 GDP result

By Doug Steel

Global bond yields were mixed overnight, with yields generally a basis point or two lower in Europe but a little higher in the US.

The US 10-year Treasury yield currently sits up about 2.5 bps around 2.31%, gaining some support from the positive data and another push higher in oil prices (despite a higher USD). Brent crude oil prices are up another 1%, to around $US51.50/bbl.

Short end US yields have largely held their post Fed decline, seeing a steeper curve. The US 2-year Treasury yield is flat on the day.

Yesterday, local yields fell across the curve following offshore moves in the previous, Fed influenced, session. NZ 10-year swap yields closed down 4.5 bps at 3.28%, while 2-year swap yields fell 1.5 bps to close just under 2.21%.

Looking ahead, there is a fair bit of offshore data over the next 24 hours although most of it is unlikely to cause a stir.

Most focus will be on Q2 US GDP, with the market anticipating a decent acceleration from a soft Q1.

Inflation guides will come via CPI’s for Japan and German along with US employment costs.

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Doug Steel is a senior economist at BNZ Markets. All its research is available here.