US 10-year Treasury rates were tightly range-bound until news emerged that the debt ceiling showdown had been pushed out by a few months. From the 2.06-2.07% mark, the 10-year rate shot up to 2.10%. The removal of near-term tail-risk from the debt ceiling issue might allow Treasury yields to trade more on fundamentals for the next month or two. Rates look a bit too low in the context of better US and global economic activity data over recent weeks.
Yesterday, NZ rates reached fresh lows for the year as they followed the previous US day’s trading moves. The 2-year swap rate closed 3bps lower at 2.13% and the 10-year rate fell by 8bps to 3.04%. We should see some reversal of that move today. Global forces remain firmly in the box seat.