New Zealand bonds close narrowly mixed ahead of GDT auction

New Zealand bonds closed narrowly mixed on Tuesday as investors awaited Global Dairy Trade (GDT) auction scheduled to be held today.

At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 1 basis point to 2.840 percent, the yield on 20-year note also dipped 1 basis point to 3.410 percent and the yield on short-term 2-year ended 1/2 basis points higher at 2.000 percent.

The country’s dairy group Fonterra, said that its domestic milk output rose 3 percent in October from the year before as wet weather subsided towards the end of the month. The surprise jump in production in the world's top dairy exporter could drag on international dairy prices that have already been under downward pressure in recent months.

Moreover, markets are still less than convinced by the prospects of the center-left coalition government and its plans for the Reserve Bank of New Zealand (RBNZ). With the appointment of a new Governor looming, there are worries that the central bank could see a shift in its policy outlook, potentially moving back towards a dovish bias, reported Torfx.

A prospective alteration to the RBNZ’s mandate has also extroverted the appeal of the New Zealand bonds, with investors nervous of the central bank being tasked with stimulating employment in addition to its inflation target.

Meanwhile, the NZX 50 index closed 0.02 percent lower at 8,088.48, while at 05:00GMT, the FxWirePro's Hourly NZD Strength Index remained highly bearish at -116.12 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex

FxWirePro launches Absolute Return Managed Program. For more details, visit http://www.fxwirepro.com/invest