New Zealand bonds surge at close ahead of GlobalDairyTrade price auction, RBNZ’s monetary policy decision

New Zealand government bonds surged at the time of closing Tuesday as investors wait to watch the country’s GlobalDairyTrade (GDT) auction, scheduled to be held later today. Also, the Reserve Bank of New Zealand’s (RBNZ) monetary policy decision, due to be unveiled on March 21 by 20:00GMT will add further direction to the debt market.

At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 1-1/2 basis points to 2.85 percent, the yield on 20-year slumped 2 basis points to 3.35 percent and the yield on short-term 2-year closed flat at 1.91 percent.

Dairy prices dipped slightly at the latest GlobalDairyTrade auction. Overall prices fell 0.6 percent and key whole milk powder prices slipped 0.8 percent. Milk fat prices were a touch weaker. Butter and anhydrous milk fat prices fell 1 percent and 3.2 percent respectively.  

Further, the Reserve Bank of New Zealand (RBNZ) is expected to again leave the Overnight Cash Rate (OCR) at 1.75 percent, and retain a cautiously upbeat stance at Grant Spencer’s last announcement as Acting Governor this week, according to a recent report from ANZ Research.

Developments since the February Statement won’t change the RBNZ’s assessment much, with the RBNZ not expecting to tighten monetary policy until the second half of 2019. OCR decisions have taken a bit of a back seat recently, with fiscal policy and potential changes to the PTA and Reserve Bank governance at the fore.

Meanwhile, the NZX 50 index closed 0.06 percent lower at 8,487.15, while at 05:00GMT, the FxWirePro's Hourly NZD Strength Index remained highly bearish at -122.34 (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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