New Zealand bonds rebound at closing in silent session despite upbeat U.S. Q2 GDP

The New Zealand bonds rebounded at the time of closing Thursday amid a silent trading session that witnessed data of little economic significance. Also, a decline in the country’s business confidence and inflation expectations supported bond prices.

At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, slid 1 basis point to 2.92 percent, the yield on 7-year note also fell 1 basis point to 2.76 percent and the yield on short-term 2-year too ended 1 basis point lower at 2.05 percent.

New Zealand business confidence declined slightly following July’s slightly softer result. However, overall confidence remains firm compared to this time last year. In particular, the construction sector has shown some rebound in their own activity outlook after a weak July result. However, pricing intentions within the construction sector have fallen. Overall, the sectors surveyed demonstrated a broadly consistent and upbeat view of the economy, with agriculture leading the pack.

Inflation expectations fell by 10 basis points to 1.88% (July: 1.98%) largely as a reflection of second quarter CPI data. Historically the survey has fluctuated around the quarterly CPI releases. This month’s survey reflected just that.

Lastly, the second estimate of Q2 US GDP growth pointed to solid momentum in domestic demand. At 3.0 percent q/q saar, the second estimate revised growth higher by four-tenths, above consensus expectations of consensus 2.7 percent.

Meanwhile, the NZX 50 index closed 0.54 percent higher at 7,817.10, while at 06:00GMT, the FxWirePro's Hourly NZD Strength Index remained neutral at -28.80 (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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