Gold Prices Fall Amid Rate Jitters; Copper Steady as China Stimulus Eyed 
The New Zealand government bonds closed higher Thursday, following a recovery in the global debt market. Also, weak United States equities and higher U.S. Treasury prices boosted demand for safe-haven assets.
The yield on the benchmark 10-year bond, which moves inversely to its price, closed 9-1/2 basis points lower at 3.40 percent, the yield on 7-year note ended down 8-1/2 basis points to 3.01 percent and the yield on short-term 2-year note slid 7-1/2 basis points at 2.31 percent.
The Kiwi bonds have been closely following developments in the U.S. debt market. The benchmark 10-year bonds witnessed strong buying in the 5-year auction, dragging yields by 7 basis points to 2.49 percent. The USD34 billion 5-year note auction came in at 2.057 percent (5.64 percent award at high) with a bid-to-cover ratio of 2.72, non-comps of USD50.9 million, an indirect bid of 71.4 percent and a direct bid of 4.1 percent.
Also, the U.S. equities moved downwards with the Dow index declining -111.36 points or -0.56 percent to 19,833.68. Meanwhile, the S&P 500 index was down -18.96 points or -0.84 percent to 2,249.92.
Last week, the gross domestic product (GDP) of New Zealand jumped more than what markets had initially anticipated, during the third quarter of this year. However, it remained below the Reserve Bank of New Zealand’s (RBNZ) target range, thus compelling the central bank to remain on hold for the foreseeable future.
The GDP rose by 1.1 percent in the September quarter. But while this was stronger than our and the market forecast, growth in the March and June quarters were revised to 0.7 percent, from 0.9 percent previously in the second quarter. This resulted in annual growth of 3.5 percent, a touch weaker than expected, data released by Statistics New Zealand showed.
Moreover, the current account deficit in New Zealand remained nearly unchanged during the third quarter of this year, in line with what markets had initially anticipated. Looking ahead, the goods balance is set to improve over the remainder of this year and into next as the surge in dairy prices since mid-year begins to be reflected in export receipts.
New Zealand’s annual current account deficit was unchanged in the September quarter, remaining at 2.9 percent of GDP. The details of the release were also in line with expectations, data released by Statistics New Zealand showed.
Lastly, we foresee that the bond prices will keep drifting between small gains and losses in quiet trading due to a long Christmas and New Year holidays.
Meanwhile, the New Zealand’s benchmark S&P/NZX50 Index closed 0.24 percent at 6,892.28. While at 05:00 GMT, the FxWirePro's Hourly New Zealand Dollar Strength Index remained highly bullish for second straight day at +102.69 (higher than +75 represent a bullish trend).
