US 10-year yields rise ahead of Fed minutes; Kocherlakota suggests Fed should consider negative interest rates; anticipation of new 2033 NZ govt bond triggers selling in other maturities

By Kymberly Martin

Yesterday, NZ swaps pushed another 1-2bps higher and NZ bond yields 3-4bps higher. US 10-year yields traded up from evening lows around 2.03% to 2.11% currently.

It was another relatively quiet day in NZ swap markets yesterday.

However, the sell-off in NZGBs, that appears partly triggered by anticipation of imminent syndication of a new NZGB 2033, continued.

Yesterday the yield on NZGB 2027s broke through its 200-day moving average to close at 3.41%, its highest level since late-July.

Yields now appear fairly attractive relative to both US counterparts and NZ swap. However, we would not be tempted to re-position for relative outperformance until after the NZGB 2033 syndication.

Overnight, in relatively calm markets, US yields pushed higher ahead of the release of the US Federal Reserve Minutes.

The US Fed’s Kocherlakota made characteristically dovish comments, going as far as to suggest the Fed should consider implementing negative interest rates.

However, this did not seem to influence the market. Ahead of the release of Minutes, US 10-year yields trade at 2.09%, from late evening lows close to 2.03%. The Minutes themselves stimulated a bout of volatility that saw yields dip toward 2.05% before returning to current levels around 2.11%.


Kymberly Martin is on the BNZ Research team. All its research is available here.

Daily swap rates

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