New Zealand 10-year bond yields close at 5-1/2 week low ahead of RBNZ’s policy decision, Gov Wheeler’s speech

The New Zealand 10-year bond yields closed Tuesday’s session at 5-1/2 week low as investors wait to watch the Reserve Bank of New Zealand’s (RBNZ) monetary policy decision scheduled to be unveiled on August 9. Further, the central bank Governor Wheeler’s speech, following the meeting, will add further guidance to the debt market.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, slumped 7 basis points to 2.88 percent, the yield on 7-year note also plunged 7 basis points to 2.72 percent and the yield on short-term 2-year ended 5 basis points lower at 2.02 percent.

The Reserve Bank of New Zealand (RBNZ) is expected to hold its August interest rate setting meeting on August 9, releasing its decision by 21:00 GMT. An Australian bank and financial-services provider, Westpac in its latest report said that the market pricing for the RBNZ has been fairly stable during the past week, a hike 100 percent priced in by August 2018.

"We expect the RBNZ to maintain the OCR at 1.75 percent on Thursday and stick to a neutral bias, in what will be Graeme Wheeler’s final OCR decision as RBNZ Governor. The market’s focus will be on the tone. While we don’t see an outright easing stance, we expect something on the dovish side of neutral and more dovish than in May," ANZ Research commented in its latest research report.

Meanwhile, the NZX 50 index closed 0.15 percent higher at 7,782.72 by 06:10 GMT, while at 06:00GMT, the FxWirePro's Hourly NZD Strength Index remained slightly bearish at -83.58 (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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