New Zealand bonds end higher as investors flock into safe-haven assets in mild trading session

New Zealand government bonds ended Friday’s session on a higher note as investors flocked into safe-haven instruments in a mild trading session that witnessed data of least economic significance. Also, the Reserve Bank of New Zealand (RBNZ) remained pat in its monetary policy decision, off late, while maintaining forecasts for rate rises in Q2 2019.  

At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, slipped 1 basis point to 2.97 percent, the yield on 20-year also fell 1 basis point to 3.48 percent and the yield on short-term 2-year slumped 2 basis points to 1.86 percent.

Yet another day of blood-letting in Wall Street and other risk-related assets were seen overnight. Fears of higher interest rates in developed central banks plagued risk-taking appetite lower overnight, especially with Bank of England’s (BoE) comment that it is likely to raise interest rates sooner and by more than previously anticipated.

As expected, the RBNZ left the OCR unchanged and repeated its neutral guidance for the OCR outlook. However, the RBNZ’s thinking has become more dovish, with a downgrade to the inflation outlook. The RBNZ still expects to keep the OCR unchanged until around mid-2019, before gradually lifting interest rates.

Meanwhile, the NZX 50 index slumped 1.04 percent while closing to 8,092.37, while at 06:00GMT, the FxWirePro's Hourly NZD Strength Index remained highly bearish at -164.01 (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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