Daily Commentary BY THE CURVE TEAM –

Daily Insights – Yields Surge

19th of October, 2021

Yields Surge

  • Yesterday saw yields surge across the curve.
  • The April 2024 government bond exceeded the RBA’s target, going as high as 0.14%. This could prompt RBA purchases.
  • For investor yields, longer terms now look increasingly attractive.
  • 2-year TD and bond rates above 0.70% are common place. 3 years over 1% is standard. 5-year rates are comfortably over 1.50%.

NZ CPI

  • Prompting the surge in yields was New Zealand’s CPI.
  • It was up 4.9% on last year following a 2.2% rise for the quarter.
  • The RBNZ have already raised the cash rate, so persistent inflation prompted markets to consider another cash rate rise in the near future.

Lending Rates Decline

  • Despite the increase in yields, lending rates appear more sticky.
  • CBA decreased their variable home loan rate, with owner occupied loans down 40 basis points.
  • Investor loans decreased 23 basis points points.
  • CBA’s “lowest variable rate is now 2.29%”, according to Banking Day.
  • CBA’s lending remains focused on on high LVRs borrowers. ‘
  • For the full article, click here: https://www.bankingday.com/public/6751a8d4-ff00-4b0f-9cc6-e9b6d8f4ae80

Josh Stewart

Associate - Money Markets