New Zealand bonds trade slightly higher following wider-than-expected January trade deficit

The New Zealand government bonds traded slightly higher Tuesday, following worse-than-expected trade deficit for the month of January. Also, a drop in the country’s business confidence lent support to the debt market.     

The yield on the benchmark 10-year bond, which moves inversely to its price fell 1 basis point to 3.25 percent at the time of closing, the yield on 7-year note also slipped nearly 1 basis point 2.84 percent and the yield on short-term 2-year note traded 1 basis point lower at 2.19 percent.

New Zealand posted a merchandise trade deficit of NZD285 million in January, Statistics New Zealand said on Tuesday, representing 7.3 percent of exports. That missed forecasts for a shortfall of NZD25 million following the NZD36 million deficit in December.

Moreover, exports were up NZD13 million or 0.3 percent on year to NZD3.91 billion, beating forecasts for NZD3.90 billion but down from NZD4.38 billion in the previous month.

Meanwhile, the New Zealand’s benchmark S&P/NZX 50 Index closed 1.25 percent higher at 7,167.46, while at 05:00 GMT, the FxWirePro's Hourly NZD Strength Index remained neutral at -8.94 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex