New Zealand bonds close higher as Trump's tough trade stance lifts global safe-haven demand

The New Zealand government bonds closed on a stronger note Tuesday following rise in global safe-haven demand after the United States President Donald Trump lifted the 12-nation Trans-Pacific Partnership (TPP) trade deal on Monday, distancing the Asian economies from its U.S. counterpart.

The yield on the benchmark 10-year bond, which moves inversely to its price, fell 1-1/2 basis points to 3.24 percent at the time of closing, the yield on 7-year note also ended 1-1/2 basis points lower at 2.91 percent and the yield on short-term 2-year note slipped 1 basis point to 2.28 percent.

President Trump also declared that he would put an end to all such treaties and trade deals that have caused no less than harm to the American citizens and adding to threats of unemployment.

Further, the U.S. Treasury Secretary nominee Steven Mnuchin talked about stopping currency manipulation and that an excessively strong dollar is likely to pose threats to the domestic economy.

Also, investors are eyeing the country’s consumer price inflation data scheduled to be released on Thursday.

Lastly, the country’s headline inflation is likely to have accelerated in the fourth quarter. According to an ANZ research report, the headline CPI is expected to have accelerated 0.3 percent sequentially, a tad above RBNZ’s November MPS pick of 0.2 percent. Annual inflation is anticipated to rise to 1.2 percent.

Meanwhile, the New Zealand’s benchmark S&P/NZX50 Index closed 0.05 percent lower at 7,064.16, while at 5:00 GMT, the FxWirePro's Hourly NZD Strength Index remained neutral at 49.08 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex