New Zealand bonds end session flat after trade balance surprises ahead of Jackson Hole Symposium

The New Zealand bonds ended Thursday’s session on a flat tone after the country’s trade balance surprised on the upside, against expectations of a deficit and as investors wait to watch the Jackson Hole Symposium, starting today for further direction in the bond market.

At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped 4 basis points to 2.94 percent, the yield on 7-year note climbed 3-1/2 basis points to 2.79 percent while the yield on short-term 2-year ended 1 basis point lower at 2.07 percent.

New Zealand’s merchandise trade surprised to the upside in July with NZD85 million surplus, above forecast of a NZD200 million deficit. This is the first surplus we have seen in July since 2012. This saw the annual deficit dropping back to NZD3.2 billion, underpinned by a 17 percent rise in exports. The rise in exports over the past year came on the back of a 51 percent surge in dairy exports (up NZD426 million), the largest rise in any month since March 2014.

In seasonally adjusted terms, exports rose by 6.7 percent, following a moderate rise in June 2017. Dairy and meat exports continued to post gains over the month and show firmness in the general demand environment, especially with the rise of exports to China. Imports rose by 2 percent in July, following a 3.7 percent decline in June on a seasonally adjusted basis. Vehicle imports continued to remain a key driver.

Meanwhile, the NZX 50 index closed 0.14 percent lower at 7,868.41, while at 05:00GMT, the FxWirePro's Hourly NZD Strength Index remained highly bearish at -137.64 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex

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