New Zealand bonds gain at close ahead of Q2 producer price index amid ongoing geopolitical tussle

The New Zealand bonds gained at the time of closing Thursday as investors now remain focussed on the country’s producer price index (PPI) data for the second quarter of this year, scheduled to be released today by 22:45GMT for further direction in the debt market.

At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, hovered around 2.60 percent, the yield on the long-term 20-year note slipped 1 basis point to 2.91 percent and the yield on short-term 2-year closed 1/2 basis point lower at 1.72 percent.

Market sentiments remained weighed down by the Turkish retaliation of tariffs against the US which were rejected by the White House as “a step in the wrong direction”, even as Qatar extended a USD15 billion investment lifeline amid the standoff, OCBC Treasury Research reported in its Daily Outlook report.

This was notwithstanding the robust US economic data where retail sales rose more than expected by 0.5 percent m/m (6.4 percent y/y) in July, albeit the June data was revised lower to 0.2 percent m/m, and reinforced expectations for a healthy Q3 GDP growth. Wall Street fell, while the 10-year UST bond yield rallied to 2.86 percent and flattened the 2-10 year curve back to 23bps (narrowest since August 2007), the report added.

Meanwhile, the NZX 50 index closed 0.13 percent higher at 8,998.91, while at 07:00GMT, the FxWirePro's Hourly NZD Strength Index remained neutral at 55.92 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex