New Zealand bonds gain at close on weak retail electronic card retail sales data, short covering

New Zealand government bonds gained at the time of closing Friday after electronic card retail sales data for October came weaker than market expectations. In addition, Investors from the start of this week built large short positions but are likely covering some of those shorts today.

At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 1/2 basis point to 2.95 percent, the yield on the 20-year note also slid 1/2 basis point to 3.48 percent and the yield on short-term 2-year ended 1-1/2 basis points lower at 2.06 percent.

People spent more eating out in October 2017, with the hospitality industry up USD15 million, Stats NZ said today. This helped nudge retail card spending up 0.3 percent in the month, when adjusted for seasonal effects. That was lower than the market expectations of 0.6 percent increase and unchanged from September’s growth of 0.3 percent. However, spending rose in four of the six industries. The largest movement was in the hospitality industry, up $15 million (1.5 percent). The hospitality industry dominated the rise in retail card spending in October.  Fuel spending dipped 0.8 percent in October (seasonally adjusted), although petrol prices rose at the end of October.

In the United States, Treasuries saw a mixed performance overnight as modest buying in the short-end was contrasted by downward pressure further out the curve. Overall, the big news of the day was the Senate version of proposed tax reform, highlighted by a delay in the corporate tax rate cut to 20 percent (from 35 percent) until 2019.

Meanwhile, the NZX 50 index closed 0.58 percent lower at 7,974.43, while at 05:00GMT, the FxWirePro's Hourly NZD Strength Index remained neutral at -65.74 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex

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