New Zealand bonds close higher despite rise in GlobalDairyTrade price index; Q1 consumer price inflation closely eyed

New Zealand government bonds closed Wednesday’s session on a higher note as investors have largely shrugged-off the rise in global dairy prices at the overnight GlobalDairyTrade (GDT) price auction. Also, expectations for a rise in the country’s consumer price inflation (CPI) for the first quarter of this year, seem to add no bearishness to the debt market.

The yield on New Zealand’s benchmark 10-year Treasury note, which moves inversely to its price, fell 1 basis point to 2.83 percent, the yield on the long-term 20-year note slumped 2 basis points to 3.41 percent and the yield on short-term 2-year closed flat at 1.95 percent.

The GDT price index increased 2.7 percent from the previous auction two weeks ago. The average price was USD3,587 a tonne. Some 19,262 tonnes of product was sold, up from 17,222 tonnes two weeks ago.

Economists expect consumer price index (CPI) inflation to slip to the bottom end of the Reserve Bank of New Zealand’s (RBNZ) target band as the government’s fees-free University policy weighs on spending. The 'market consensus' is for a 0.5 percent q/q rise in prices on Thursday – 0.1 percent lower than the central bank’s forecast.

Meanwhile, the NZX 50 index closed 0.30 percent higher at 8,369.49, while at 05:00GMT, the FxWirePro's Hourly NZD Strength Index remained neutral at -46.74 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex

FxWirePro launches Absolute Return Managed Program. For more details, visit http://www.fxwirepro.com/invest