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The New Zealand bonds plunged at the time of closing Tuesday as investors expect to see a rise in the country’s gross domestic product (GDP) for the second quarter of this year, scheduled to be released on September 19 by 22:45GMT. Also, the GlobalDairyTrade (GDT) price auction, due later today, will add further direction to the debt market.
At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, jumped 2-1/2 basis points to 2.633 percent, the yield on the long-term 20-year note also climbed 2-1/2 basis points to 2.955 percent and the yield on short-term 2-year too closed 2-1/2 basis points higher at 1.690 percent.
At the latest GDT price auction held a fortnight back on September 4, dairy product prices witnessed a decline, dragged by unexpected fall in prices of milk powder and butter. The GDT price index slipped 0.7 percent from the previous auction two weeks ago. The average price was USD2,980 a tonne, compared with USD3,044 a tonne two weeks ago.
New Zealand’s gross domestic product (GDP) for the second quarter of this year is expected to have seen solid growth of 0.7 percent q/q, although that would still see annual growth moderate from 2.7 percent to 2.5 percent y/y, according to the latest report from ANZ Research. From here, it is further expected that the economy will struggle to grow at trend, having lost some momentum.
While next week’s GDP print is expected to be solid, it is already being overshadowed by forward-looking indicators of activity into the second half of next year. There are concerns about the degree of economic momentum, particularly given the subdued read coming from business confidence surveys and the fact that the RBNZ has expressed concern about the outlook for activity.
Meanwhile, the NZX 50 index closed 0.48 percent higher at 9,315.77, while at 06:00GMT, the FxWirePro's Hourly NZD Strength Index remained highly bullish at 159.478 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex
