New Zealand bonds close higher even as July trade deficit narrows, cheers investors

The New Zealand bonds closed higher Friday as investors have largely shrugged off the better-than-expected reading in the country’s trade balance data for the month of July, narrowing down compared to that in June.

At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, hovered around 2.600 percent, the yield on the long-term 20-year note slid 1 basis point to 2.910 percent and the yield on short-term 2-year also closed 1 basis point down at 1.700 percent.

New Zealand recorded a trade deficit of $143 million in July, a better than expected result for the month but partly offset by a downward revision for June. The annual deficit widened further to $4,441 million.

Seasonally adjusted exports jumped by 6.3 percnet in July, with a sharp rise in volumes across most commodities. This suggests that the strength in July may have been a matter of timing, with a greater than usual number of shipments during the month. There was also a strong lift in dairy export prices for the month, but recent dairy auctions indicate that this will soon reverse, Westpac Research reported.

Meanwhile, the NZX 50 index closed 0.22 percent higher at 9,159.63, while at 07:00GMT, the FxWirePro's Hourly NZD Strength Index remained neutral at -2.90 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex