New Zealand bonds end higher on short-covering

The New Zealand bonds closed higher Thursday as investors covered previous short positions after a long rally this week. Also, investors have largely shrugged off the improvement in the country’s latest GlobaldairyTrade (GDT) price auction, held late Tuesday. 

At the time of closing, the yield on the benchmark 10-year bond, which moves inversely to its price, slumped 4-1/2 basis points to 2.98 percent, the yield on 7-year note also plunged 4-1/2 basis points to 2.87 percent and the yield on short-term 2-year note ended 3 basis points lower at 2.05 percent.

Federal Reserve policymakers were increasingly split on the outlook for inflation and how it might affect the future pace of interest rate rises, according to the minutes of the Fed's last policy meeting on June 13-14 released on Wednesday.

The details of the meeting, at which the U.S. central bank voted to raise interest rates, also showed that several officials wanted to announce a start to the process of reducing the Fed's large portfolio of Treasury bonds and mortgage-backed securities by the end of August but others wanted to wait until later in the year, Reuters reported.

Global dairy prices continued to moderate after a strong run earlier in the year at a fortnightly auction on Wednesday, although closely watched whole milk powder prices rose. The Global Dairy Trade (GDT) Price Index dipped 0.4 percent, with an average selling price of NZD3,303 per tonne, in the auction held in the early hours of Wednesday. The index had slipped 0.8 percent at the previous sale.

Meanwhile, the New Zealand’s benchmark S&P/NZX 50 Index closed 0.45 percent higher at  7,629.61 while at 06:00GMT, the FxWirePro's Hourly NZD Strength Index remained neutral at 67.38 (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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