New Zealand bonds jump at close after Fed delivers slightly dovish policy statement

The New Zealand bonds jumped at the time of closing Thursday as the market received a lift after seeing U.S. Treasuries gain on a slightly dovish Federal Reserve policy meeting statement.

At the time of closing, the yield on the benchmark 10-year bond, which moves inversely to its price, fell 1 basis point to 3.00 percent, the yield on 7-year note also slipped 1 basis point to 2.86 percent while the yield on short-term 2-year note ended 1/2 basis point lower at 1.97 percent.

Treasury prices gained on Wednesday after the Federal Reserve indicated it is likely to begin paring its balance sheet in the coming months and struck a slightly dovish tone on inflation. But it also noted that both overall inflation and a measure of underlying price gains had declined.

In addition, New Zealand’s unadjusted trade balance was a little stronger than expected in June, at NZD242 million. However, as May’s balance was revised down a touch (to NZD74 million), it is really one of the figures being broadly in line with expectations. In seasonally adjusted terms, the deficit narrowed from NZD387 million to NZD104 million, which is the second smallest monthly deficit over the past 12 months.

Meanwhile, the New Zealand’s benchmark S&P/NZX 50 Index closed flat at  7,711.72 while at 06:00GMT, the FxWirePro's Hourly NZD Strength Index remained neutral at 47.38 (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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