New Zealand bonds reverse strength at close in silent trading ahead of GDT price auction

The New Zealand bonds reversed gains at the time of closing Friday as investors moved away from safe-haven instruments in a mild trading session that witnessed data of little economic significance.

At the time of closing, the yield on the benchmark 10-year bond, which moves inversely to its price, jumped 2 basis points to 3.00 percent, the yield on 7-year note also climbed 2 basis points to 2.85 percent while the yield on short-term 2-year note ended tad higher at 2.13 percent.

The microeconomic agenda is strong, the terms of trade are at a 40+ year high and carry remains attractive. Amid a backdrop of increased US political uncertainty and an apparent back-pedalling of earlier hawkish rhetoric across the major central banks, it’s little wonder the NZD is up here.

New Zealand’s relative position is slipping, domestic growth is levelling out, the general election is just around the corner, and we expect a turn in the global liquidity cycle, which will present challenges for ‘risk’ assets.

Meanwhile, the New Zealand’s benchmark S&P/NZX 50 Index slumped nearly 1 percent to  7,639.51 while at 05:00GMT, the FxWirePro's Hourly NZD Strength Index remained highly bullish at 131.28 (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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