New Zealand bonds jump at close after dairy prices decline for second straight month

The New Zealand bonds jumped at the time of closing Wednesday after Global dairy prices slumped for the second time in a row at an auction held early on Wednesday, suggesting an earlier rally was running out of steam. Also, the country’s political deadlock over which party will succeed in forming the coalition with NZ First Party added to range-bound trading in bond prices.

At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, slumped 4 basis points to 2.92 percent, the yield on 15-year note also plunged 4 basis points to 3.26 percent and the yield on short-term 2-year ended 2-1/2 basis points lower at 2.06 percent.

The GDT Price Index dipped 1 percent, with an average selling price of USD3,204 per tonne, in the auction held in the early hours of the morning. The index fell 2.4 percent at the previous sale, according to GDT Events, which runs the auctions.

Prices had risen in the second quarter on strong global demand and as production eased, but have since had a bumpy ride. Nevertheless, analysts were upbeat on the outlook for dairy prices given very wet weather had curbed production in New Zealand, the world's largest dairy exporter.

Meanwhile, the NZX 50 index closed 0.04 percent higher at 8,115.02, while at 06:00GMT, the FxWirePro's Hourly NZD Strength Index remained neutral at 42.84 (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