New Zealand bonds jump at close ahead of Q2 CPI, GlobalDairyTrade price auction

New Zealand bonds closed higher Monday as investors wait to watch the country’s consumer price inflation (CPI) for the second quarter of this year, scheduled to be released today by 22:45GMT. Focus will also remain on the GlobalDairyTrade (GDT) price auction, due to be held on July 17 for added direction in the debt market.

At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, plunged nearly 2-1/2 basis points to 2.86 percent, the yield on the long-term 20-year note slumped 2 basis points to 3.17 percent and the yield on short-term 2-year also closed 2 basis points lower at 1.83 percent.

New Zealand’s headline consumer price inflation is expected to have risen 0.1 percent q/q in the second quarter of this year. This would bring annual inflation to 1.2 percent – a 0.1 percentage point lift from Q1, but well below the Reserve Bank of New Zealand’s (RBNZ) May MPS forecast of 1.5 percent y/y, according to the latest report from ANZ Research.

Wall Street climbed on Friday amid buoyant bank earnings, with S&P500 back above 2,800. Trade tensions also notched lower slightly towards the end of last week as China appeared to moderate their response to the latest announcement of additional 10 percent US tariffs on another USD200 billion of Chinese imports, even as China’s monthly trade surplus with the US hit a record of USD28.97 billion in June.

Also, US President Trump in an interview named the EU as a “foe” for the US based on “what they do to us in trade”, while Russia is a “foe in certain respects” and China is a “foe economically”.

Meanwhile, the NZX 50 index closed 0.49 percent lower at 8,980.31, while at 06:00GMT, the FxWirePro's Hourly NZD Strength Index remained neutral at 40.50 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex