The New Zealand bonds plunged at the time of closing Thursday after the Reserve Bank of New Zealand (RBNZ) left interest rates on hold, while clearly maintaining a neutral bias. Also, Governor Wheeler’s comments remained tad optimistic, adding value for riskier assets.
The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 1 basis point to 2.83 percent, the yield on 7-year note also slid 1 basis point to 2.68 percent and the yield on short-term 2-year too ended 1 basis point lower at 2.01 percent.
The Reserve Bank of New Zealand (RBNZ) left interest rates at a record low 1.75 percent and kept projections for rates largely unchanged, wrong footing doves who had thought it might lower the future path of hikes.
The RBNZ did say a lower kiwi would be needed to lift inflation, but also noted that it had risen in part because of weakness in the US dollar. The kiwi is up nearly 4 per cent since June. Further, the central bank projected a steady course on rates until 2020 while expecting headline inflation to struggle back into the midpoint of its 1-3 percent target band over the medium-term.
Meanwhile, the NZX 50 index remained 0.13 percent lower at close at 7,789.71 by 06:20 GMT, while at 06:00GMT, the FxWirePro's Hourly NZD Strength Index remained highly bearish at -170.85 (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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