New Zealand bonds plunge at close despite fall in global dairy prices

The New Zealand bonds plunged at the time of closing Wednesday despite a fall in global dairy prices at the GlobalDairyTrade (GDT) price auction, held in the overnight session.

At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, jumped nearly 4 basis points to 2.578 percent, the yield on the long-term 20-year note surged close to 3-1/2 basis points to 2.900 percent and the yield on short-term 2-year remained tad higher at 1.658 percent.

According to a report from New Zealand Herald, dairy product prices fell at the Global Dairy Trade auction, led by unexpected slides in whole milk powder and butter. The GDT price index slipped 0.7 percent from the previous auction two weeks ago. The average price was US$2,980 a tonne, compared with US$3,044 a tonne two weeks ago.

Yesterday’s market action was mostly dominated by risk-off sentiments especially in EM markets, even though IMF MD Lagarde said IMF-Argentina talks had “made progress”. Overnight, Wall Street drifted lower amid the commodity price retreat, whereas the 10-year UST bond yield rose to 2.90 percent given the heavy corporate issuance pipeline and better-than-expected manufacturing ISM data.

Meanwhile, the NZX 50 index closed 0.69 percent lower at 9,228.00, while at 07:00GMT, the FxWirePro's Hourly NZD Strength Index remained neutral at -120.474 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex