New Zealand bonds close higher following Australian debt market

New Zealand government bonds closed higher Wednesday following a rise in prices of Australian debt, which pushed the yields over 5 basis points across the curve.

At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 6-1/2 basis points to 2.905 percent, the yield on 20-year note also slid 5 basis points to 3.480 percent and the yield on short-term 2-year ended 4 basis points lower at 2.03 percent.

Australian government bonds gained Wednesday after Australian wage growth has come in well below expectations for the second straight month. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 6 basis points to 2.604 percent.

Moreover, Finance Minister Grant Robertson told Reuters last week that the new RBNZ governor needed to be ready to embrace and employment goal in its mandate, and he would reject any candidate that was not the "right person".

On Tuesday, the latest poor Chinese economic data did not show any impact on the bonds movement, given that China is New Zealand’s top trading partner. Data on Tuesday showed that the country's fixed asset investment growth between January and October slowed to 7.3 percent, below the 7.4 percent forecast in a Reuters poll. China’s retail sales rose 10 percent on the year in October, while industrial output grew 6.2 percent. Industrial output, for its part, increased 6.2 percent that month, a touch below the 6.3 percent forecast.

Meanwhile, the NZX 50 index closed 0.10 percent lower at 7,999.94, while at 05:00GMT, the FxWirePro's Hourly NZD Strength Index remained slightly bearish at -85.71 (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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