New Zealand bonds close higher after June trade balance worsens beyond market expectations

New Zealand bonds closed higher Wednesday after the country’s trade balance for the month of June, released late yesterday, worsened beyond market expectations, remaining lower than the previous reading in May as well.

At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, slumped a little over 3 basis points to 2.81 percent, the yield on the long-term 20-year note slipped 1 basis point to 3.11 percent while the yield on short-term 2-year closed flat at 1.85 percent.

New Zealand’s goods trade balance slipped into deficit in June to the tune of NZD113 million, driving a widening in the annual deficit to NZD4.0 billion, weaker than market expectations of NZD200 million and -NZD3,618 million respectively.

Seasonally adjusted export values lifted 2.5 percent m/m in June. However, the big three – dairy, meat and forestry – were soft. Dairy values rose 0.1 percent m/m, with a dip in prices largely offsetting a 2.5 percent rise in volumes. Meat and forestry values fell 4.8 percent and 11.1 percent m/m.

Meanwhile, the NZX 50 index closed 0.37 percent higher at 8,933.89, while at 06:00GMT, the FxWirePro's Hourly NZD Strength Index remained highly bearish at -127.76 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex