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New Zealand government bonds closed flat on the last trading day of the week as trading volumes remained muted ahead of the long Christmas weekend.
At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, was flat at 2.77 percent, the yield on 20-year also closed neutral at 3.31 percent and the yield on short-term 2-year too ended steady at 1.91 percent.
In the last data released by New Zealand, the economy expanded by 0.6 percent q/q in Q3, which was in line with consensus expectations. However, on the back of some meaningful historical revisions, annual growth, at 2.7 percent y/y, was considerably stronger than expected.
In the quarter itself, 12 of the 16 production-based industries recorded growth. The main lift came from a broad-based recovery in construction, which bounced 3.6 percent q/q after falling over the prior two quarters. Led by professional, scientific and administrative services, health care services and arts and recreation services, services sector activity expanded 0.6 percent q/q. Conversely, primary production fell 0.4 percent q/q, led down by weaker agricultural production.
Expenditure GDP rose a stronger 0.9 percent q/q, again outperforming its production-based equivalent after earlier underperforming. Private consumption rose a respectable 0.8 percent q/q, while general government consumption was strong at 2.5 percent q/q. Residential investment (3.3 percent q/q) was strong, while other investment was a little more mixed. Net exports recorded a 0.5ppt drag on growth, while inventories also dragged on growth (0.9ppts) for the third consecutive quarter.
Meanwhile, the NZX 50 index closed 0.38 percent higher at 8,396.43, while at 06:00GMT, the FxWirePro's Hourly NZD Strength Index remained neutral at 45.01 (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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