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New Zealand bonds close tad higher post RBNZ Governor Wheeler's 'neutral' economic outlook

The New Zealand government bonds ended the session tad higher Thursday after the Reserve Bank of New Zealand Governor Graeme Wheeler maintained 'neutral' economic and policy outlook, besides, adding that risks remain tilted to the downside.

The yield on the benchmark 10-year bond, which moves inversely to its price fell 1 basis point to 3.34 percent at the time of closing, the yield on 7-year note also slid nearly 1 basis point to 2.89 percent and the yield on short-term 2-year note traded 1 basis point lower at 2.20 percent.

As was clear at the February Monetary Policy Statement, the RBNZ is "very neutral" and today that was reinforced, with Wheeler noting that risks to the OCR outlook are "equally weighted". In practice, that means that they see an even chance of rate cuts and rate hikes, which the Governor was quite explicit in highlighting today.

Overall, there was a clear reiteration of neutrality. Wheeler stated that "there is an equal probability that the next OCR adjustment could be up or down".

Meanwhile, the New Zealand’s benchmark S&P/NZX 50 Index closed 0.38 percent higher at 7,175.83, while at 05:00 GMT, the FxWirePro's Hourly NZD Strength Index remained neutral at -18.61 (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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