New Zealand bonds slump at close after consumer confidence instils hopes amid range-bound trading

The New Zealand bonds slumped at the time of closing Thursday after a private survey revealed an upbeat consumer confidence amid a silent trading session that witnessed data of least economic significance. Also, investors’ risk appetite improved after a new poll on the country’s upcoming election showed the National Party on 10 points lead of the Labour counterpart, with the numbers to potentially govern alone.

At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped 7-1/2 basis points to 2.93 percent, the yield on 7-year note surged 6-1/2 basis points to 2.79 percent and the yield on short-term 2-year ended 3-1/2 basis points higher at 2.06 percent.

The country’s ANZ-Roy Morgan Consumer Confidence Index lifted from 126.2 to 129.9 in September, which is the highest level since July 2014. Once we adjust for seasonality, the index rose by 2 points to also be at its highest level since July 2014. After its recent low in April, the seasonally adjusted index has surged over 15 points.

Inflation expectations were steady at 3.1 percent, up from 3.0 percent, but still within familiar ranges. National house price inflation expectations continue to drop. At 2.5 percent, they are the lowest since 2012, and have more than halved in 5 months. All regions are on the same page, with expectations across every region now below 3 percent. Auckland and regional South Island are the lowest at 2.4 percent and 2.2 percent respectively.

Meanwhile, the NZX 50 index ended 0.10 percent lower at 7,819.23, while at 06:00GMT, the FxWirePro's Hourly NZD Strength Index remained slightly bullish at 82.06 (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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