New Zealand bonds suffer at close following rout in global debt market

The New Zealand government bonds suffered at the time of closing on Monday tracking rout in the global debt market.

In intraday trading, the yield on the benchmark 10-year bond, which moves inversely to its price, rose 6-1/2 basis points to 3.26 percent, the yield on 7-year note jumped 6 basis points to 2.90 percent and the yield on the short-term 2-year note bounced 4-1/2 basis points to 2.26 percent.

The Australian bonds have been closely following developments in the U.S. debt market. The U.S. benchmark 10-year bond yields rose over 8bps to 2.42 percent on strong rebound in wages, pointing to sustained momentum in the country’s labor market. However, markets shrugged off lower-than-expected non-farm payrolls and rise in the rate of unemployment.

U.S. average hourly earnings rose 0.4 percent m/m, while non-farm payrolls came in at 156,000, lower than market expectations of 178,000. Further, the rate of unemployment December slightly rose to 4.7 percent, from 4.6 percent in November.

Moreover, last week, the dairy product prices have fallen at Fonterra's GlobalDairyTrade auction, sliding for a second consecutive auction as whole milk powder prices unexpectedly sank amid increased volume on offer.

The GDT price index fell 3.9 percent to $3,463, down from $3,656 at the previous auction two weeks ago. Some 22,396 tonnes of product was sold, edging up from 22,321 tonnes at the previous auction. Whole milk powder dropped 7.7 percent to $3,294 a tonne.

Meanwhile, the New Zealand’s benchmark S&P/NZX50 Index closed 0.60 percent higher at 7,012.74, while at 6:00GMT, the FxWirePro's Hourly NZD Strength Index remained neutral at -63.40 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex