New Zealand bonds end mixed in muted session ahead of December trade balance data

New Zealand government bonds ended Monday’s session on a mixed note despite a muted trading day that is scheduled to witness no data of major economic significance. However, the country’s trade balance data for the month of December, scheduled to be released today by 21:45GMT will add further direction to the debt market.

At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped 2-1/2 basis points to 2.94 percent, the yield on 20-year plunged 1-1/2 basis points to 3.44 percent and the yield on short-term 2-year ended nearly flat at 1.97 percent.

The US economy grew 2.6 percent y/y in Q4 2017. The increase was slightly below consensus of 3 percent, but underlying details were reasonable. Consumption grew by 3.8 percent and fixed investment 6.8 percent, reflecting a turnaround in residential and mining investment and another double-digit gain in equipment investment. The weakness centered on inventories and net exports. Even though exports grew by a robust 6.9 percent, imports expanded by an even larger 13.9 percent, partly reflecting a catch-up after the hurricane disruptions. The durability of consumption growth will be questioned with spending continuing to outpace income growth pushing the saving rate to a decade low of just 2.6 percent.

Meanwhile, the NZX 50 index closed 0.19 percent higher at 8,327.59, while at 06:00GMT, the FxWirePro's Hourly NZD Strength Index remained highly bearish at -151.80 (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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