New Zealand bonds close higher after dairy prices ease at overnight GDT auction

The New Zealand closed on the upside after dairy prices eased at the country’s latest GlobalDairyTrade (GDT) price auction, held earlier today. However, prices rose for the sixth consecutive time, albeit at a moderate pace.

At the time of closing, the yield on the benchmark 10-year bond, which moves inversely to its price, slumped 2-1/2 basis points to 2.72 percent, the yield on 7-year note also plunged 2-1/2 basis points to 2.62 percent and the yield on short-term 2-year note ended 1-1/2 basis points lower at 1.92 percent.

Prices in the latest Global Dairy Trade (GDT) auction, the 11th sale of calendar 2017, rose 0.6 percent following a 3.2 percent gain previously. This was the 6th successive gain with prices rising close to 15 percent in the past two months.

Prices have held above the December 2016 highs in the latest auction which will boost underlying confidence with overall prices close to 3-year highs. The gains across products will help offset some disappointment surrounding the decline in Whole Milk Powder prices.

Fonterra lifted the forecast milk price for 2016/17 to USD6.15 per kg/ms and also forecast an opening price for USD6.50 for 2017/18.

Meanwhile, the New Zealand’s benchmark S&P/NZX 50 Index closed 0.36 percent lower at 7,467.90 while at 06:00GMT, the FxWirePro's Hourly NZD Strength Index remained highly bullish at 152.33 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex