With the UST 10yr at 2.18% and little change to Aussie bond futures, the chance of local rates making any big moves is limited

By Jason Wong

US 10-year Treasury rates are trading up 2 bps to 2.18%. 

This still represents a 3 bps fall relative to the last NZ close on Friday, with the soft employment report driving the rate down to a fresh low for the year of 2.14%. 

There are no more top-tier data releases ahead of the FOMC meeting next week, other than CPI and retail sales data several hours before the announcement. This could see a fairly tight range for rates until that time.

In the local market, the open will be impacted by two forces, slightly lower US rates but little change in Australian bond futures relative to Friday’s close.

Overall, we might see little movement in swap rates from Friday’s close of 2.70% for 5-year swap and 3.195% for 10-year swap.

The short end of the curve remains tightly bound by expectations of little change to NZ monetary policy for an extended period.

Daily swap rates

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