New Zealand bonds close slightly higher after trade surplus eases in May

The New Zealand bonds closed slightly on the upside Tuesday after witnessing a softer trade surplus for the month of May, undershooting market expectations, released earlier today.

At the time of closing, the yield on the benchmark 10-year bond, which moves inversely to its price, slumped 1-1/2 basis points to 2.78 percent, the yield on 7-year note also slipped 1-1/2 basis points to 2.69 percent and the yield on short-term 2-year note traded flat at 1.99 percent.

The trade balance clocked up another surplus of NZD103 million in May. However, this was weaker than expectations and there were some downward revisions to exports for April. This led to a widening in the annual trade balance to $3.75 billion (versus expectations it would narrow).

The May trade balance undershot expectations, largely due to much stronger-than-expected imports. However, in seasonally adjusted terms, May registered a trade deficit of NZD386 million, while on an annual basis the trade deficit widened to NZD3.”75 billion versus expectations it would narrow.

"It is likely the annual trade deficit should continue to be steady to slightly smaller through the spring period depending on the strength of the NZD," ANZ Research commented in its latest report.

Meanwhile, the New Zealand’s benchmark S&P/NZX 50 Index closed 0.41 percent higher at 7,626.35 while at 05:00GMT, the FxWirePro's Hourly NZD Strength Index remained highly bullish at 151.84 (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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