New Zealand 10-year bond ends slightly lower on rising Bremain support

The New Zealand government bonds closed modestly lower on Tuesday as Brexit fears started to fade, boosting investor appetite for risk.

The yield on benchmark 10-year bond, which moves inversely to its price rose 1/2 basis point to 2.555 percent.

The recent polls in the United Kingdom in run up to the June 23 Brexit referendum indicate that the percentage of citizens in favour of "Remain" the European Union (EU) has outnumbered those who want to "Leave", easing the possibility that Britain might leave the EU after 43 years of membership in the bloc.

According to the NatCen poll results on the United Kingdom referendum campaign, 53 percent would vote to 'Remain' in the European Union, while, 47 percent would vote to 'Leave'. Similarly, the ORB/Daily Telegraph poll results on the United Kingdom referendum campaign, 53 percent would vote to 'Remain' in the European Union, while, 46 percent would vote to 'Leave'.

Last week, the New Zealand Q1 Gross Domestic Product (GDP) rose 0.7 percent q/q, marginally higher than the market consensus for 0.5 percent, but lower from previous 0.9 percent q/q in the last quarter of 2015. Also, Q1 GDP rose 2.8 percent y/y, beating market expectations of 2.6 percent, from 2.3 percent during the same period a year ago. The latest growth was driven by the construction and health industries, but partly offset by decreases in the primary industries and manufacturing.

Markets will remain keen to focus on the first leg of Fed Chair Yellen’s semiannual monetary policy testimony before Congress on Tuesday (before the Senate Banking Committee) and Thursday’s referendum on the United Kingdom’s membership of the European Union. Additionally, New Zealand markets receive no more important data of great significance this week.

The New Zealand’s benchmark S&P/NZX50 Index closed down 30.15 points to 6,839.39.