New Zealand close higher despite rise in Q1 retail sales; market eyes GDT price auction

The New Zealand bonds closed higher Monday despite a rise in the country’s retail sales for the first quarter of this year. Further, investors are closely eyeing the GlobalDairyTrade (GDT) price auction, scheduled to be held on May 16 for further direction in the debt market.

At the time of closing, the yield on the benchmark 10-year bond, which moves inversely to its price, slumped 6-1/2 basis points to 2.99 percent, the yield on 7-year note also plunged 6-1/2 basis points to 2.65 percent and the yield on the short-term 2-year note too traded 6 basis points lower at 1.98 percent.

After softness in the latter half of 2016, retail spending rebounded in March, rising by 1.5 percent over the quarter. Much of this was the result of a very large 5.9 percent increase in motor vehicle sales. However, there were gains in most categories, with core spending up 1.2 percent over the quarter.

"Turning to prices, we estimate that overall prices were up close to 2 percent over the past year. However, there are some divergent trends across sectors. Much of the recent increase in prices has been due to food and fuel costs. Looking at prices for other goods, things continue to look subdued," Westpac commented in its latest research report.

Meanwhile, the New Zealand’s benchmark S&P/NZX 50 Index closed 0.30 percent lower at 7,429.94 while at 06:00GMT, the FxWirePro's Hourly NZD Strength Index remained neutral at -67.69 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex