New Zealand bonds close flat in subdued trading session, investors eye labor market report

The New Zealand government bonds closed flat Tuesday as investors remained barely active amid a subdued trading session, following lack of significant economic data. Also, China, Hong Kong and Vietnam markets remain closed on account of Lunar New Year holidays that further lent a dull sentiment towards trading.

Investors are now looking forward to the labor market report, scheduled to be released on Wednesday.

The yield on the benchmark 10-year bond, which moves inversely to its price, hovered around 3.38 percent at the time of closing, the yield on 7-year note also traded around 3.01 percent and the yield on short-term 2-year note remained flat at 2.34 percent.

Asian stocks remained muted, after the United States President Donald Trump reigned in an aggressive immigration policy on that restricts entry into the country for travellers from seven Muslim-majority nations.

Further, the Australian bonds have been closely following developments in oil markets because of their impact on inflation expectations. The International benchmark Brent futures moved lower 0.22 percent to USD55.20 and West Texas Intermediate (WTI) fell 0.44 percent to USD52.40 by 5:20 GMT.

Also, New Zealand’s December trade balance, released on Monday, improved to –NZD41 million, beating market consensus of -NZD98 million, from -NZD705 million in November.

Lastly, the Reserve Bank of New Zealand (RBNZ) is expected to hold its first monetary policy meeting of 2017 on February 9. It is widely expected to maintain the official cash rate (OCR) at a historic low of 1.75 percent amid stronger than expected lift in inflation was more broad-based than widely anticipated.

Meanwhile, the New Zealand’s benchmark S&P/NZX 50 Index closed 0.49 percent lower at 7,050.75, while at 5:00 GMT, the FxWirePro's Hourly NZD Strength Index remained highly bullish at -121.77 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex