New Zealand bonds gain at close after dairy prices slip at GDT auction

The New Zealand bonds gained at the time of closing Wednesday after global dairy prices fell at the latest GlobalDairyTrade price auction held late Tuesday amid a silent trading session that witnessed data of little economic significance.

At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped 5 basis points to 2.86 percent, the yield on 7-year note also climbed 4-1/2 basis points to 2.71 percent and the yield on short-term 2-year ended 3 basis points higher at 2.05 percent.

Prices in the latest Global Dairy Trade (GDT) auction, the 4th sale of the 2017-18 season, fell 0.4 percent following a 1.6 percent decline at the previous sale. Whole Milk Powder prices fell 0.6 percent, following a 1.3 percent gain previously, although Skim Milk Powder prices rose 0.3 percent. There was a further small correction in butter prices which fell 1.3 percent.

Prices overall have dipped slightly further below highs seen in December 2016 with significant erosion over the past two months. The data will maintain concerns that underlying strength in the sector is fading slightly, especially as futures markets were expecting an increase in Whole Milk Powder of close to 4.0 percent for the latest sale.

Meanwhile, the NZX 50 index rose 0.51 percent at close to 7,853.34, while at 05:00GMT, the FxWirePro's Hourly NZD Strength Index remained neutral at -60.52 (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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