New Zealand bonds plunge at close tracking U.S. Treasuries; eyes on Q4 consumer inflation data

New Zealand government bonds plunged at the time of closing Friday, tracking a fall in U.S. Treasuries as well, on news of a plausible re-shuffling in the United States’ Federal Reserve.

At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped 5 basis points to 2.99 percent, the yield on 20-year surged 5-1/2 basis points to 3.46 percent and the yield on short-term 2-year ended 1-1/2 basis points higher at 2.05 percent.

Long-time Federal Reserve insider John Williams has been interviewed by the White House for the post of vice chairman of the U.S. central bank, according to a person familiar with the discussions, though he was not viewed as being on the short-list for the job.

Positive risk sentiments globally has underpinned the NZ dollar, though economic news domestically has been mixed at best with business sentiment taking a turn for the worse. The next major hurdle will be consumer price inflation for the fourth quarter due on January 25. Analysts see some downside risk for inflation given food prices fell sharply in the quarter and a soft outcome would likely pressure the kiwi.

Meanwhile, the NZX 50 index closed 0.30 percent lower at 8,272.67, while at 06:00GMT, the FxWirePro's Hourly NZD Strength Index remained neutral at -15.02 (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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