New Zealand bonds jump at close on short-covering amid silent trading session

New Zealand bonds closed Thursday’s session on a higher note as investors covered their previous short positions amid a silent trading session that witnessed data of least economic significance.

At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, slipped 1 basis point to 2.85 percent, the yield on the long-term 20-year note also fell 1 basis point to 3.38 percent and the yield on short-term 2-year too closed 1 basis point lower at 1.88 percent.

As expected, the Government’s first Budget emphasized prudence over promises. Operating surpluses are projected to grow and net core Crown debt to fall below 20 percent of GDP by 2022 – 19.1 percent, in fact.

On the funding side, NZDMO’s bond issuance guidance has been lifted by $1bn to $8bn in 2019, 2020 and 2021 fiscal years, while 2018 and 2022 are unchanged at $7bn. Over the five years to June 2022, total bonds issued are expected to be $38bn compared to $35bn at the Half Year Update. However, two-thirds of the increase is owing to a reduction in short-term funding through Treasury bills.

Meanwhile, the NZX 50 index closed 0.56 percent higher at 8,603.38, while at 06:00GMT, the FxWirePro's Hourly NZD Strength Index remained highly bearish at -105.46 (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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