New Zealand bonds tad lower on profit booking; GDT price auction in focus next week

The New Zealand government bonds traded a tad lower Friday as investors cashed in profits on the last day of the week after witnessing a long rally. Also, markets will now be focussing on the GlobalDairyTrade (GDT) price auction, scheduled to be held on March 7 for further direction in the bond market.

The yield on the benchmark 10-year bond, which moves inversely to its price rose 1/2 basis point to 3.33 percent at the time of closing, the yield on 7-year note also pushed higher by nearly 1/2 basis point to 2.89 percent and the yield on mid-term 5-year note traded 1/2 basis point higher at 2.61 percent.

Dairy prices fell 3.2 percent in the latest GlobalDairyTrade auction held last week, following modest rises in the previous two auctions. Within last night’s move, whole milk powder prices declined 3.7 percent to USD3,189/MT, the lowest level since Oct 2016, although prices are still 55 percent higher than mid-2016.

The NZ bonds have been closely following developments in oil markets because of their impact on inflation expectations. The International benchmark Brent futures moved a tad higher by 0.11 percent to USD55.14 and West Texas Intermediate (WTI) slightly rose 0.08 percent to USD52.65 by 04:50 GMT.

Meanwhile, the New Zealand’s benchmark S&P/NZX 50 Index closed 0.21 percent lower at 7,160.86, while at 04:00 GMT, the FxWirePro's Hourly NZD Strength Index remained highly bearish at -148.15 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex