New Zealand bonds close rangebound after Q1 2018 GDP meets expectations, lower than previous

New Zealand bonds closed rangebound on Thursday after the country’s gross domestic product (GDP) data for the first quarter of this year, met market expectations, albeit remaining lower than the previous reading in Q4 2017.

At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, rose nearly 1/2 basis point to 2.98 percent, the yield on the long-term 20-year note closed tad higher at 3.30 percent and the yield on short-term 2-year closed nearly flat at 1.92 percent.

New Zealand's GDP rose by 0.5 percent in the March quarter, in line with market expectations. The economy has lost some momentum as firms take a cautious approach to the new Government and as the housing market has cooled.

The economy has lost some momentum as firms take a cautious approach to the new Government and as the housing market has cooled. Softer growth in the near term provides some caution about the scope for additional fiscal spending, and reinforces that the case for OCR hikes is some way off.

"There doesn’t appear to be much in the way of special factors holding down the quarterly result – growth was widespread across industries but unremarkable in most cases. Consequently, we don’t expect to see a strong rebound next time. Our forecast for the June quarter is 0.7% growth, but the risks are to the downside," Westpac Research commented in its latest report.

Meanwhile, the NZX 50 index closed 1.04 percent higher at 8,998.78, while at 06:00GMT, the FxWirePro's Hourly NZD Strength Index remained neutral at -108.01 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex