The New Zealand government bonds closed flat in thin Wednesday trading activity during a relatively quiet session that witnessed data of little significance. Also, trading activity to resume after New Year celebrations, probably from the second week of January, 2017 as global market receives no more important data till then.
The yield on the benchmark 10-year bond, which moves inversely to its price, closed 1 basis point higher at 3.46 percent, the yield on 7-year note ended up 2 basis points to 3.04 percent and the yield on short-term 2-year note rose 2-1/2 basis points at 2.32 percent.
The gross domestic product (GDP) of New Zealand jumped more than what markets had initially anticipated, during the third quarter of this year. However, it remained below the Reserve Bank of New Zealand’s (RBNZ) target range, thus compelling the central bank to remain on hold for the foreseeable future.
The GDP rose by 1.1 percent in the September quarter. But while this was stronger than our and the market forecast, growth in the March and June quarters were revised to 0.7 percent, from 0.9 percent previously in the second quarter. This resulted in annual growth of 3.5 percent, a touch weaker than expected, data released by Statistics New Zealand showed.
Moreover, the current account deficit in New Zealand remained nearly unchanged during the third quarter of this year, in line with what markets had initially anticipated. Looking ahead, the goods balance is set to improve over the remainder of this year and into next as the surge in dairy prices since mid-year begins to be reflected in export receipts.
New Zealand’s annual current account deficit was unchanged in the September quarter, remaining at 2.9 percent of GDP. The details of the release were also in line with expectations, data released by Statistics New Zealand showed.
Lastly, we foresee that the bond prices will keep drifting between small gains and losses in quiet trading due to a long Christmas and New Year holidays.
Meanwhile, the New Zealand’s benchmark S&P/NZX50 Index closed flat at 6,875.79. While at 06:00 GMT, the FxWirePro's Hourly New Zealand Dollar Strength Index remained highly bullish at +109.91 (higher than +75 represent a bullish trend).
