New Zealand bonds close tad higher in muted trading as investors await Fed’s policy decision

New Zealand government bonds closed tad higher Wednesday as investors remained sidelined in any major trading activity amid a silent session that witnessed no data of major economic significance. Also, investors are now closely eyeing the Federal Reserve’s monetary policy decision, due later today for further direction in the debt market.

At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, remained tad higher at 2.84 percent, the yield on 20-year note hovered around 3.39 percent while the yield on short-term 2-year ended 2 basis points lower at 1.97 percent.

The housing market continued its run of the recent improvement in November. REINZ data, seasonally adjusted by Westpac, registered a 4.1 percent lift in house sales in November, after a 3.4 percent lift in October. This takes house sales back to a level last seen in May, although sales are still 9 percent lower than a year ago.

One important thing to note is that REINZ has changed its methodology. This will create a tendency for the number of sales to be understated at first and then revised higher over time. For example, in October we reported that house sales had risen 1.3 percent, but that has now been revised to 3.4 percent. The implication is that house sales may have risen even more than 4.1 percent in November. 

Meanwhile, the NZX 50 index closed 0.05 percent higher at 8,284.58, while at 07:00GMT, the FxWirePro's Hourly NZD Strength Index remained highly bullish at 140.74 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex

FxWirePro launches Absolute Return Managed Program. For more details, visit http://www.fxwirepro.com/invest