US 10-year bond yields fell by 53 basis points to 1.64% in January, the sharpest single-month fall since 2011.
BNZ economists said that had put some downward pressure on local short-end swap yields but the bigger force in New Zealand markets was the speculation – proved accurate – that the RBNZ would put an end to its tightening bias for the OCR.
Yesterday’s LGFA bond tender was fully allocated for the lowest volume ever offered.
There was $80 million on offer in 2023 bonds, for which $307 million in bids was received.
For 2020 bonds, $65 million was bid for the$20 million available.
There was $10 million available in both 2017 and 2019 bonds, for which $37 million and $39 million was bid respectively.
Settlement is February 10.
Westpac economists said: "The recent spate of international monetary policy easings, some via policy rates and some via balance sheet expansion, has fuelled a fresh wave of bond buying globally. New Zealand’s real yields are the highest in the OECD world by some margin, and thus attract attention. That highly-rated LGFA bonds continue to offer a spread over swaps will be seen by some as a global anomaly.”
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