New Zealand bonds decline post rise in GDT price index

The New Zealand bonds declined Wednesday, following a positive reading at last night’s GlobalDairyTrade (GDT) price auction.

The yield on the benchmark 10-year bond, which moves inversely to its price, traded flat at 3.11 percent, the yield on 7-year note rose 1 basis point to 2.75 percent and the yield on short-term 2-year note also traded 1/2 basis point higher at 2.12 percent.

At last night’s GDT auction, the aggregate price index rose 1.6%, building on the 1.7% rise in the previous auction. After the sharp fall in early March, dairy prices now look to have found a base.

Within last night’s move, whole milk powder prices rose 2.4 percent to USD2,924/tonne. Although prices are still down nearly 20 percent this year, they are 40 percent higher than mid-2016 when prices were lingering just above USD2000/tonne. In contrast, skim milk powder has become somewhat of an unwanted by-product, with prices falling a further 0.8 percent last night to USD1,913/tonne.

Further, demand from China remained solid last night. While markets had witnessed a rise in buying from South America in the previous auction, potentially reflecting the significant contraction in Argentina’s milk production in recent months, this buying wasn’t sustained last night.

Meanwhile, the New Zealand’s benchmark S&P/NZX 50 Index traded 0.18 percent higher at 7,257.86 by 04:50GMT, while at 04:00 GMT, the FxWirePro's Hourly NZD Strength Index remained neutral at -60.32 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex