New Zealand bonds slump at close on hopes of rise in Q2 GDP; GlobalDairyTrade price auction eyed

The New Zealand bonds slumped at the time of closing Monday as investors expect to see a rise in the country’s gross domestic product (GDP) for the second quarter of this year, scheduled to be released on September 19 by 22:45GMT. Also, the GlobalDairyTrade (GDT) price auction, due on September 19, will add further direction to the debt market.

At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, jumped nearly 3 basis points to 2.608 percent, the yield on the long-term 20-year note surged close to 2 basis points to 2.930 percent and the yield on short-term 2-year closed tad higher at 1.665 percent.

New Zealand’s gross domestic product (GDP) for the second quarter of this year is expected to have seen solid growth of 0.7 percent q/q, although that would still see annual growth moderate from 2.7 percent to 2.5 percent y/y, according to the latest report from ANZ Research. From here, it is further expected that the economy will struggle to grow at trend, having lost some momentum.

While next week’s GDP print is expected to be solid, it is already being overshadowed by forward-looking indicators of activity into the second half of next year. There are concerns about the degree of economic momentum, particularly given the subdued read coming from business confidence surveys and the fact that the RBNZ has expressed concern about the outlook for activity.

Meanwhile, the NZX 50 index closed 0.00833 percent higher at 9,271.53, while at 06:00GMT, the FxWirePro's Hourly NZD Strength Index remained neutral at 68.31 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex