New Zealand bonds close higher as investors await RBNZ’s monetary policy decision

The New Zealand bonds ended Wednesday’s session on a higher note as investors wait to watch the Reserve Bank of New Zealand’s (RBNZ) monetary policy decision, scheduled to be unveiled on May 11.

At the time of closing, the yield on the benchmark 10-year bond, which moves inversely to its price, fell 1 basis point to 3.09 percent, the yield on 7-year note also slipped 1 basis point to 2.78 percent and the yield on the short-term 2-year note too 1 basis point lower at 2.11 percent.

The RBNZ is expected to once again leave the OCR at 1.75 percent on Thursday. Additionally, inflation expectations have lifted, the fiscal stance is shifting more neutral (after dragging), capacity utilisation is at all-time highs, the labour market continues to tighten and the NZD TWI is 4-1/2 percent below the RBNZ’s February forecasts. Activity gauges point to a decent pace of underlying economic growth momentum (and stronger than Q4).

Lastly, markets will remain glued to the comments made by the central bank governor post the policy decision, for further direction in the debt market.

Meanwhile, the New Zealand’s benchmark S&P/NZX 50 Index closed 0.16 percent higher at 7,422.20, while at 05:40GMT the FxWirePro's Hourly NZD Strength Index remained slightly bullish at 99.16 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex