New Zealand bonds end mixed ahead of Q2 CPI, GDT price auction

The New Zealand bonds ended narrowly mixed at the start of the trading week Monday as investors are awaiting to read the country’s consumer price-led inflation for the second-quarter of this year, scheduled to be released on July 18. Also, market participants are eyeing the GlobaldairyTrade (GDT) price auction, due on the same day for further direction in the debt market. 

At the time of closing, the yield on the benchmark 10-year bond, which moves inversely to its price, rose 1/2 basis point to 2.99 percent, the yield on 7-year note also hovered around 2.87 percent while the yield on short-term 2-year note ended 2 basis points lower at 1.98 percent.

Inflation in New Zealand likely slowed in the second quarter after accelerating at the start of the year, a cooling that would strengthen the central bank's resolve to keep interest rates steady at record lows for some time. Consumer prices likely rose only 0.2 percent in the second quarter, according to a Reuters poll of 14 economists. In the January-March period, prices increased 1.0 percent on a quarterly basis.

In the last GDT price auction, held on July 4, dairy prices declined 0.4 percent, following a 0.8 percent decline at the previous sale. NZ dairy output is expected to increase during the next 12 months which will provide important net support to overall dairy incomes if global prices hold firm.

Meanwhile, the New Zealand’s benchmark S&P/NZX 50 Index closed 0.65 percent higher at  7,699.57 while at 05:00GMT, the FxWirePro's Hourly NZD Strength Index remained neutral at 28.30 (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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