New Zealand bonds close tad lower amid muted trading session ahead of GDT price auction

The New Zealand bonds closed tad lower Monday amid a muted trading session that witnessed data of little economic significance ahead of the GlobalDairyTrade (GDT) price auction, scheduled to be held on September 4 for added direction in the debt market.

At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, rose 1/2 basis point to 2.545 percent, the yield on the long-term 20-year note remained tad higher at 2.870 percent and the yield on short-term 2-year too closed nearly 1/2 basis point up at 1.658 percent.

New Zealand’s terms of trade – the ratio of goods export prices to import prices – rose by 0.6 percent in the June quarter. The result was only slightly below market expectations of a 1 percent rise.

Export prices rose by 2.4 percent, reversing their decline in the previous quarter. Prices were up consistently across the country’s main commodity exports, helped in part by a lower New Zealand dollar over the quarter. Further, import prices rose by 1.7 percent, dominated by a 10 percent jump in oil prices. Prices for imports of manufactured goods were generally subdued, outside of the impact of the lower NZ dollar.

New Zealand’s 10-year government bond yield has decoupled from the US, with the relative outlooks for monetary policy explaining most, but not all, of that divergence, according to the latest report from ANZ Research.

Meanwhile, the NZX 50 index closed 0.60 percent lower at 9,257.29, while at 06:00GMT, the FxWirePro's Hourly NZD Strength Index remained neutral at -47.75 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex