The New Zealand 10-year bond yields closed nearly five months high Tuesday after higher-than-expected third quarter consumer inflation data lowered the Reserve Bank of New Zealand’s easing bets.
The yield on the benchmark 10-year bond, which moves inversely to its price, rose 7-1/2 basis points to 2.635 percent, the yield on 7-year note ended 6 basis points higher at 2.303 percent and the yield on short-term 2-year note also climbed 6 basis points to 1.980 percent.
New Zealand’s third-quarter consumer inflation rose by 0.2 percent, higher than the market expectations of flat outcome, from up 0.4 percent in the previous quarter. On an annual basis, inflation dropped to 0.2 percent, the eighth straight quarter below 1 percent. However, we foresee that today's inflation reading was not far from the central bank's expectation, and will not stand in the way of it cutting the official cash rate again in November.
Moreover, the Reserve Bank had forecast a 0.1 percent increase in its August Monetary Policy Statement. The annual inflation rate slowed from 0.4 percent to 0.2 percent, just above the record low of 0.1 percent that it briefly touched in December last year, reported Westpac in its Research note.
Lastly, investors will remain keen to focus on the upcoming GlobalDairyTrade (GDT) auction prices.
Meanwhile, the New Zealand’s benchmark S&P/NZX50 Index closed down 93.28 points to 6,973.09.
