UST 10yr rises to 2.35% on Fed talk. Eyes on US NFPs. Aussie retail hits local swap rates. Markets not worried even if National loses up to two seats in final election count

By Jason Wong

US 10-year Treasury yields were tightly bound around 2.32-2.33% until the Fed’s Williams’ speech notes hit the screen, taking yields up to 2.35%. 

We’ve seen previous resistance around this level over the past week, so it’ll be interesting to see whether yields can push on higher. 

Tonight’s US employment report will be closely watched, although the data will be contaminated with hurricane effects, which will push payrolls lower than otherwise and wages higher than otherwise.

Of the Fed speakers tonight, Dudley’s talk on monetary policy holds the most interest.

Yesterday, NZ rates were slightly lower across the curve, with the 2-year swap rate down 1 bp to 2.20% and the 10-year rate down 3 bps to 3.23%, helped by lower Australian rates after the weak retail sales report. 

Over the weekend, we’ll see the final count from the election, which is expected to see National lose at least one seat and quite possibly two seats to the Labour-Greens side. Political factors haven’t rattled the rates market so far and we don’t expect it to be a significant factor, relative to the more important global forces on the bond market.

Daily swap rates

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Jason Wong is on the BNZ Research team. All its research is available here.

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