New Zealand bonds gain at close despite rise in dairy prices at latest GDT auction

The New Zealand bonds gained at the time of closing Wednesday despite witnessing a rise in dairy prices at the latest GlobalDairyTrade (GDT) price auction.

At the time of closing, the yield on the benchmark 10-year bond, which moves inversely to its price, slumped 2-1/2 basis points to 2.93 percent, the yield on 7-year note also plunged 2-1/2 basis points to 2.60 percent and the yield on the short-term 2-year note too traded 1 basis point lower at 1.94 percent.

Dairy prices pushed higher in last night’s GlobalDairyTrade auction, rising 3.2 percent overall. That was the fifth consecutive rise and takes prices to the highest level this year. Recent gains in prices have come against a backdrop of improving supply, especially from Europe and New Zealand.

Indeed, production in Europe has already risen notably off 2016’s trough, and more product will become available to global markets as New Zealand’s 2017/18 season really ramps up from September.

"Fonterra is expected to provide its initial guidance for the 2017/18 farmgate milk price next week. It’s likely to be a conservative forecast in the low-USD6s," Westpac Research commented in its latest report.

Meanwhile, the New Zealand’s benchmark S&P/NZX 50 Index closed 0.20 percent lower at 7,422.50 while at 06:00GMT, the FxWirePro's Hourly NZD Strength Index remained neutral at 48.74 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex