FxWirePro: A glimpse on US treasuries and swap yields in antipodeans after Fed

A run through of key insights of Fed policy:

The verdict, given the official stamp of approval from the FOMC, marks the first ever increase since the panel pushed the key rate to 5.25 % on June 29, 2006.

The benchmark 10Y note yields jumped to 2.31% instantly soon after the announcement. 2Y notes yielded above 1% and hovering near those levels afterwards.

However, FOMC administrators explicitly made a mention over post-meeting documents that the pace of rises would go gradual and absolutely hooked on the worthy economic data.

We already stated in our earlier post also that in multi-month, we expect to see NZD/USD lower towards 0.62 as the divergent monetary policies of the Fed and RBNZ play out.

And same is the case with AUDUSD, the major trend has been downtrend dominated by the bears to retest 0.7050 levels with clear volume confirmation.

AU swap yields 1 day: the 2yr should open around 2.24% while the 10yr should open around 3.06%.

AU swap yields 1-3 month: The 1.90% yield support area looks resilient for the 2yr. The 10yr continues to follow the US 10yr, 2.80% a decent base for now.

NZ swap yields 1 day: Should open unchanged given the modest net movements in US yields overnight, the 2yr at 2.86%, and the 10yr at 3.73%.

NZ swap yields 1-3 month: Short maturity NZ interest rates should stall around here until early 2016 given material updates on inflation won't come to hand until January (and then April).

We expect the 2yr to range between 2.65% and 2.85%.

The 10yr yield will be hostage to expectations regarding the pace of Fed policy tightening. We target 3.70%+.