New Zealand bonds close lower on world debt market rout after ECB mentions withdrawal of stimulus in meeting minutes

The New Zealand bonds closed lower Friday following a massive rout in the global debt market after minutes from the European Central Bank’s (ECB) June meeting showed that the possibility of a potential withdrawal of monetary stimulus.

At the time of closing, the yield on the benchmark 10-year bond, which moves inversely to its price, slumped 4-1/2 basis points to 2.98 percent, the yield on 7-year note also plunged 4-1/2 basis points to 2.87 percent and the yield on short-term 2-year note ended 3 basis points lower at 2.05 percent.

Senior officials at the ECB warned of the dangers of triggering market moves which could hurt its attempts to raise inflation in the bloc, according to the latest minutes of its June policy meeting. Following a week in which markets have been roiled by the prospect of an earlier than expected end to the ECB’s stimulus measures, policymakers cautioned over how to best communicate upbeat trends in the eurozone economy.

Global dairy prices continued to moderate after a strong run earlier in the year at a fortnightly auction on Wednesday, although closely watched whole milk powder prices rose. The Global Dairy Trade (GDT) Price Index dipped 0.4 percent, with an average selling price of NZD3,303 per tonne, in the auction held in the early hours of Wednesday. The index had slipped 0.8 percent at the previous sale.

Meanwhile, the New Zealand’s benchmark S&P/NZX 50 Index closed 0.10 percent lower at  7,622.13 while at 06:00GMT, the FxWirePro's Hourly NZD Strength Index remained slightly bearish at -85.17 (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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