New Zealand bonds close higher in muted trading ahead of Chinese Lunar Year holidays

New Zealand government bonds closed Monday’s session on a higher note amid a muted trading week that is scheduled to witness data of least economic significance. Also, the upcoming Chinese Lunar New Year holidays have cast a gloomy sentiment worldwide, leading to a rise in demand for safe-haven assets.

At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, slipped 1 basis point to 3.01 percent, the yield on 20-year also fell 1 basis point to 3.52 percent and the yield on short-term 2-year too close a basis point lower at 1.89 percent.

New Zealand households started the year off with a bang. Retail spending rose a solid 1.4 percent in January. That was stronger than analysts’ expectations, including on top of market forecast.  

January’s strong rise in spending was underpinned by a lift in durable spending. Stats NZ has attributed this to spending associated with increased purchases of ‘back to school’ supplies, which increasingly include electronic devices. 

"With mortgage rates edging down and renewed strength in the housing market, we expect to see continued strength in spending in the early part of 2018. However, this strength is expected to ease back somewhat over the year," Westpac Research commented in its latest report.

Meanwhile, the NZX 50 index closed 0.41 percent lower at 8,059.06, while at 04:00GMT, the FxWirePro's Hourly NZD Strength Index remained highly bullish at 156.41 (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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