New Zealand bonds end higher as trade tensions resume ahead of RBNZ’s monetary policy meeting

New Zealand bonds closed on the upside Tuesday as global trade war tensions re-started with China re-imposing trade tariffs on the United States and the latter repeating sanctions on Iran ahead of the Reserve Bank of New Zealand’s (RBNZ) monetary policy meeting, which will most likely be non-eventful, scheduled to be held on August 8.

At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, plunged 3 basis points to 2.77 percent, the yield on the long-term 20-year note slumped 2-1/2 basis points to 3.08 percent and the yield on short-term 2-year closed 1-1/2 basis points lower at 1.80 percent.

Wall Street closed higher for a third session as investors focused on strong earnings results from Berkshire Hathaway and took a sanguine view of escalating US-Sino trade tensions as well as geopolitical developments elsewhere on the Korean peninsula and US’ re-imposition of some sanctions on Iran. The USD and UST bond market also gained overnight, with the 10-year yield holding below 3 percent, OCBC Treasury Research reported in its latest outlook.

The RBNZ will probably repeat that it expects to keep the Overnight Cash Rate (OCR) at its current low level for a long while. The OCR forecast will likely be unchanged, or perhaps could be shifted a tiny smidgen lower, Westpac Research reported.

Meanwhile, the NZX 50 index closed 0.31 percent lower at 8,875.73, while at 06:00GMT, the FxWirePro's Hourly NZD Strength Index remained neutral at -14.48 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex