New Zealand 10-year bond yields close over 6-week low, tracking U.S. Treasuries post weaker-than-expected jobless claims

The New Zealand 10-year bond yields closed Friday’s session at over 6-week low, tracking a similar trend in the overnight performance of the U.S. Treasuries after economic data, highlighting the initial jobless claims as well as producer price index disappointed markets, surprisingly.

Also, President Trump expressed little hope that negotiations could defuse tensions or put an end to North Korea’s program to develop nuclear-armed intercontinental ballistic missiles capable of striking the United States or its allies, during a speech on Thursday, re-enforcing his intentions to strike hard on the persisting tension.

At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, slumped 4 basis points to 2.81 percent, the yield on 7-year note also plunged 4 basis points to 2.67 percent and the yield on short-term 2-year ended 2-1/2 basis points lower at 2.02 percent.

Jobless claims for the week ending August 5 edged higher to 244k, a touch higher than what consensus was expecting (240k). This takes the four-week moving average lower to 241k. Claims have witnessed a largely sideways trend these past couple of months, indicating little to no change in the rate of separations in the labor market. Continuing claims for the week ending July 29 were down to 1951k (previous: 1967k), while the four-week moving average held steady at 1965k. The insured unemployment rate remained unchanged at 1.4 percent.

In addition, President Donald Trump reinforced his threat to unleash “fire and fury” on North Korea despite widespread criticism of his bellicosity, saying Thursday that his initial statement maybe “wasn’t tough enough.” Trump used versions of the word “tough” four times during one seven-minute exchange with reporters while downplaying the potential for negotiations and sanctions, which came only hours after Secretary of Defense James. N. Mattis stressed the importance of diplomacy in the increasingly tense standoff with the nuclear-armed state.

Meanwhile, the NZX 50 index slumped 0.91 percent at close to 7,719.11, while at 05:00GMT, the FxWirePro's Hourly NZD Strength Index remained neutral at -57.16 (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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