New Zealand bonds jump at close after Q1 2018 retail sales decline; eyes on April trade balance data

New Zealand bonds jumped at the time of closing Monday after the country’s retail sales data for the first quarter of this year declined, thus providing support to debt prices. Also, investors are now focussing on the country’s trade balance data, scheduled to be released on May 23 by 22:45GMT.

At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, slumped 4 basis points to 2.85 percent, the yield on the long-term 20-year note also plunged 4 basis points to 3.39 percent and the yield on short-term 2-year too closed 1-1/2 basis points lower at 1.87 percent.

The country’s retail sales volumes rose just 0.1 percent q/q in Q1, versus market expectations of 1.0 percent q/q. Growth in the preceding quarter was also revised down from 1.7 percent to 1.4 percent q/q. Annual growth fell from 5.4 percent to 3.0 percent. In per capita terms, real spending fell 0.4 percent q/q, to be up 1.5 percent y/y.

Market players may take heart that the US and China have decided on “putting the trade war on hold” according to US Treasury Secretary Mnuchin which came on the back of talks in Washington last week after China agreed to “substantially” reduce the US trade deficit, albeit there was some confusion if China would adhere to the US demand for a US$200 annual reduction.

Meanwhile, the NZX 50 index closed 0.48 percent lower at 8,615.72, while at 06:00GMT, the FxWirePro's Hourly NZD Strength Index remained neutral at 22.78 (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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