New Zealand bonds jump at close despite Italy’s improving political scenario amid silent domestic market

New Zealand bonds jumped at the time of closing Thursday despite a slight improvement in Italy’s political situation after attempts were seen to form a coalition government so that a snap election can be avoided.

At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, fell 1-1/2 basis points to 2.74 percent, the yield on the long-term 20-year note slid 1/2 basis point to 3.26 percent and the yield on short-term 2-year closed 2 basis points lower at 1.86 percent.

The Italian president, Sergio Mattarella, has granted Italy’s two populist leaders more time to form a government in an attempt to stave off a snap election. The decision to “slow things down” – taken three months after an election that resulted in a hung parliament – was an attempt to try to stem a possible financial crisis, after markets slumped on Monday and Tuesday owing to fears of what a new vote could bring.

Market risk aversion over the Italian political drama ebbed (as parties are said to be trying to find a compromise for the economy minister) and Italy sold EUR5.57 billion bonds (which is at the higher end of EUR3.75-6.0 billion).

Meanwhile, the NZX 50 index closed 0.13 percent higher at 8,658.79, while at 06:00GMT, the FxWirePro's Hourly NZD Strength Index remained neutral at 38.28 (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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