US Treasury rates continue to drift lower, with the 10-year rate down 1bp to just under 2.20%. The chartists will be eyeing up the 2.16% level, which is the low for the year reached mid-April and the 200-day moving average.
With speculative net long positioning in 10-year futures not seen for a decade and rates close to their year-to-date low, the market is backing the view that the US Fed will ultimately back down from its policy guidance of a series of rate hikes through to end-2019.
The recent dataflow might well be supportive of that view for now, but if recent weakness in inflation does prove to be temporary then there could be an unwelcome sell-off for traders later in the year.
With the tailwind of falling global rates, yesterday NZ long term rates reached fresh lows for the year, with 5 and 10-year swap rates closing at 2.705% and 3.19% respectively. It’s another full economic calendar ahead, with focus on tonight’s US ADP employment and ISM manufacturing data.