New Zealand bonds end higher as politics continue to weigh; 10-year yield down 4 bps this week

New Zealand bonds closed higher Thursday as the country’s ongoing political and policies uncertainties continue to weigh. So far this week, the bond yields remained on the downside, where 10-year yield plunged over 4 basis points to its lowest in more than a week.

At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 4 basis points to 2.865 percent, the yield on 20-year note also slid 5 basis points to 3.430 percent and the yield on short-term 2-year ended 3 basis points lower at 2.005 percent.

Markets are still less than convinced by the prospects of the center-left coalition government and its plans for the Reserve Bank of New Zealand (RBNZ). With the appointment of a new Governor looming, there are worries that the central bank could see a shift in its policy outlook, potentially moving back towards a dovish bias, reported Torfx.

A prospective alteration to the RBNZ’s mandate has also extroverted the appeal of the New Zealand bonds, with investors nervous of the central bank being tasked with stimulating employment in addition to its inflation target.

Meanwhile, the NZX 50 index closed 0.43 percent higher at 8,034.70, while at 06:00GMT, the FxWirePro's Hourly NZD Strength Index remained highly bearish at -143.61 (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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