New Zealand bonds close mixed in subdued trading session, investors shrug off improved trade data

The New Zealand government bonds closed mixed Monday as investors remained sidelined in any major trading activity amid a subdued session that witnessed data of little economic significance. However, markets have largely shrugged off the improvement in the country’s trade balance data.

The yield on the benchmark 10-year bond, which moves inversely to its price, plunged 6 basis points to 3.38 percent at the time of closing, while the yield on 7-year note rose 1/2 basis point to 3.01 percent and the yield on short-term 2-year note fell 5 basis points to 2.34 percent.

New Zealand’s December trade balance improved to –NZD41 million, beating market consensus of -NZD98 million, from -NZD705 million in November.

Further, U.S. real gross domestic product grew by 1.9 percent y/y in the fourth quarter according to the advance estimate, falling short of the median consensus estimate of 2.2 percent.

Asian stocks plunged, after the United States President Donald Trump reigned in an aggressive immigration policy that restricts entry into the country for travellers from seven Muslim-majority nations.

The Australian bonds have been closely following developments in oil markets because of their impact on inflation expectations. The International benchmark Brent futures moved lower 0.57 percent to USD55.38 and West Texas Intermediate (WTI) fell 0.45 percent to USD52.93 by 5:30 GMT.

Lastly, the Reserve Bank of New Zealand (RBNZ) is expected to hold its first monetary policy meeting of 2017 on February 9. It is widely expected to maintain the official cash rate (OCR) at a historic low of 1.75 percent amid stronger than expected lift in inflation was more broad-based than widely anticipated.

Meanwhile, the New Zealand’s benchmark S&P/NZX50 Index closed 0.68 percent lower at 7,085.56, while at 6:00 GMT, the FxWirePro's Hourly NZD Strength Index remained neutral at -17.52 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex