New Zealand bonds end higher post better-than-expected improvement in June trade balance

The New Zealand bonds gained at the time of closing Wednesday after reading the better-than-expected improvement in the country’s trade balance for the month of June, released early today.

At the time of closing, the yield on the benchmark 10-year bond, which moves inversely to its price, fell 1 basis point to 3.00 percent, the yield on 7-year note also slipped 1 basis point to 2.86 percent while the yield on short-term 2-year note ended 1/2 basis point lower at 1.97 percent.

The trade balance was broadly as expected in June, with the seasonally adjusted deficit narrowing modestly on the back of unwind in some of last month’s (petrol driven) import strength, and an ongoing decent export performance. By-and-large, we see this improvement continuing.

The unadjusted trade balance was a little stronger than expected in June, at NZD242 million. However, as May’s balance was revised down a touch (to NZD74 million), it is really one of the figures being broadly in line with expectations. In seasonally adjusted terms, the deficit narrowed from NZD387 million to NZD104 million, which is the second smallest monthly deficit over the past 12 months.

Meanwhile, the New Zealand’s benchmark S&P/NZX 50 Index closed 0.03 percent lower at  7,710.59 while at 05:00GMT, the FxWirePro's Hourly NZD Strength Index remained neutral at -7.33 (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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