The New Zealand government bonds closed modestly higher on Wednesday, despite global dairy prices rising to its highest level since June 2014 at the overnight Global Dairy Trade (GDT) auction as demand remained upbeat.
The yield on the benchmark 10-year bond, which moves inversely to its price, closed 1 basis point lower at 3.24 percent, the yield on 7-year note ended down nearly 1 basis point to 2.82 percent and the yield on short-term 2-year note fell 1 basis point to 2.17 percent.
The latest Global Dairy Trade (GDT) auction recorded a 3.5 percent increase in prices following a 4.5 percent gain in the previous auction, while Whole Milk Powder prices rose 4.9 percent. Prices have increased at the last 4 auctions and in 8 of the last 9 auctions with prices now at the highest since the end of June 2014.
The Reserve Bank of New Zealand Governor Graeme Wheeler while speaking before a parliamentary committee, said that he expects consumer inflation to rebound to the central bank’s target band in the last quarter of 2016.
Moreover, New Zealand’s Prime Minister John Key surprisingly announced his resignation today after 8 years of service ahead of next general election, which is scheduled to be held in late 2017. Finance Minister Bill English is mostly expected to take over after Key’s formal resignation on next Monday.
Meanwhile, the New Zealand’s benchmark S&P/NZX50 Index closed down 20.59 points to 6,889.77. While at 05:00 GMT, the FxWirePro's Hourly New Zealand Dollar Strength Index stood neutral at +1.76 (higher than +75 represent a bullish trend).
