New Zealand bonds end higher as investors await RBNZ’s monetary policy statement, followed by Governor Orr’s speech

New Zealand bonds ended on a higher note Tuesday as investors wait to watch the Reserve Bank of New Zealand’s (RBNZ) monetary policy decision, scheduled to be unveiled on May 9, followed by a press conference later in the day. Also, the focus remains on the central bank Governor Adrian Orr’s first policy decision speech, due on May 10 for added insights into the debt market.

At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, slumped 1-1/2 basis points to 2.77 percent, the yield on the long-term 20-year note also plunged 1-1/2 basis points to 3.32 percent and the yield on short-term 2-year closed flat at 1.89 percent.

The Reserve Bank of New Zealand (RBNZ) is expected to leave the Overnight Cash Rate (OCR) unchanged at 1.75 percent at its monetary policy meeting, scheduled to be held next Thursday. This is the first Monetary Policy Statement with Adrian Orr as Governor and will be watched closely for any hints that the RBNZ’s views and approach to monetary policy are changing, according to the latest report from ANZ Research.

This Monetary Policy Statement will also be the first under the new Policy Targets Agreement, signed between the new Governor and the Minister of Finance. The RBNZ is now tasked with contributing to supporting "maximum sustainable employment" in the context of its medium-term inflation target – a stepping stone towards a true dual mandate.

Meanwhile, the NZX 50 index closed 0.077 percent higher at 8,594.59, while at 06:00GMT, the FxWirePro's Hourly NZD Strength Index remained highly bullish at 135.10 (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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