New Zealand bonds gain at close despite higher-than-expected Q4 retail sales

New Zealand government bonds gained at the time of closing Friday after the country’s retail sales for the fourth quarter of this year came in higher than market expectations. Further, dairy product prices also declined at the latest GlobalDairyTrade auction, sliding for the first time this year after three consecutive increases.

At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, slipped 1 basis point to 2.98 percent, the yield on 20-year also edged 1 basis point lower to 3.48 percent nd the yield on short-term 2-year too ended 1 basis point lower at 1.89 percent.

The country’s retail spending rose 1.7 percent in December quarter. That was a bit above our own forecast and market expectations. This followed a much muted gain in the preceding quarter.

Underpinning the rise in overall spending was a solid 1.8 percent lift in core categories. That included gains in food and grocery sales, as well as increased spending on items like clothing and electronics. Some of this strength may have been related to the increased prevalence of ‘Black Friday’ sales in New Zealand.

The GDT price index eased 0.5 percent on Wednesday morning from the previous auction two weeks ago. The average price was USD3623 (NZD5,072) a tonne. Some 20,256 tonnes of product was sold, down from 22,197 tonnes two weeks ago. Whole milk powder eked out a 0.3 percent gain to USD3246 a tonne.

Meanwhile, the NZX 50 index closed 0.42 percent higher at 8,301.72, while at 06:00GMT, the FxWirePro's Hourly NZD Strength Index remained highly bearish at -112.15 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex

FxWirePro launches Absolute Return Managed Program. For more details, visit http://www.fxwirepro.com/invest