New Zealand bonds gain tracking firmness in U.S. Treasuries; investors eye Q1 CPI

The New Zealand bonds gained Tuesday tracking firmness in the U.S. counterpart and as investors are curiously eyeing the country’s consumer price inflation (CPI) for the first quarter of this year, scheduled to be released on April 20 for further direction in the debt market.

The yield on the benchmark 10-year bond, which moves inversely to its price, slumped 1 basis point to 2.99 percent, the yield on 7-year note also slipped nearly 1 basis point to 2.68 percent and the yield on the short-term 2-year note too traded 1 basis point lower at 2.14 percent by 04:40GMT.

CPI data this week should show headline inflation back at target (or close to it), but the broader inflationary pulse will likely remain tame. Dairy prices are expected to lift modestly. Further, currency signals remain mixed as cyclical, secular, and political dynamics collide.

"Headline inflation will be higher, but we don’t think an outcome at or near target changes the outlook for the OCR, given the role played by base effects and the benign state of inflation outside of the housing, as our Inflation Gauge showed last week," ANZ Research commented in its latest research report.

Meanwhile, the New Zealand’s benchmark S&P/NZX 50 Index remained flat at 7,229.56 by 04:50GMT, while at 04:00 GMT, the FxWirePro's Hourly NZD Strength Index remained slightly bullish at 99.78 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex