New Zealand bonds close lower on hopes of rise in Q1 consumer price inflation; GlobalDairyTrade price auction too eyed

New Zealand government bonds closed lower Monday as investors expect to see a rise in the country’s consumer price inflation (CPI)  for the first quarter of this year, scheduled to be released on April 18 by 22:45GMT. Also, the GlobalDairyTrade (GDT) price auction, due on April 17 will add further direction to the debt market.

The yield on New Zealand’s benchmark 10-year Treasury note, which moves inversely to its price, rose 1 basis point to 2.85 percent, the yield on the long-term 20-year note steadied at 3.44 percent and the yield on short-term 2-year too closed 1 basis point higher at 1.96 percent.

Economists expect consumer price index (CPI) inflation to slip to the bottom end of the Reserve Bank of New Zealand’s (RBNZ) target band as the government’s fees-free University policy weighs on spending. The 'market consensus' is for a 0.5 percent q/q rise in prices on Thursday – 0.1 percent lower than the central bank’s forecast.

Lastly, dairy product prices fell at the latest GDT auction, dragged lower by an unexpected plunge in anhydrous milk fat. The GDT price index slipped 0.6 percent from the previous auction two weeks ago. The average price was USD3,477 a tonne. Some 17,222 tonnes of product was sold, down from 18,635 tonnes two weeks ago.

Meanwhile, the NZX 50 index closed 0.10 percent lower at 8,406.35, while at 06:00GMT, the FxWirePro's Hourly NZD Strength Index remained neutral at 72.59 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex

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