New Zealand bonds close sideways in calm session ahead of Q4 consumer inflation data

New Zealand government bonds closed sideways at the start of the week Monday as investors remained side-lined in amy major trading activity amid a muted session that witnessed data of little economic significance. Investors are now focusing on the country’s consumer inflation data for the fourth quarter of this year, schedule to be released on January 24 for further direction in the debt market.

At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose 1/2 basis point to 3.00 percent, the yield on 20-year hovered around 3.46 percent and the yield on short-term 2-year ended flat at 2.05 percent.

Positive risk sentiments globally has underpinned the NZ dollar, though economic news domestically has been mixed at best with business sentiment taking a turn for the worse. The next major hurdle will be consumer price inflation for the fourth quarter due on January 25. Analysts see some downside risk for inflation given food prices fell sharply in the quarter and a soft outcome would likely pressure the kiwi.

Further, the partial shutdown of the federal government has stretched into a third day, as discussions continue on a funding and immigration plan. Lawmakers said Sunday they made progress on an agreement to end the shutdown, but did not reach a final deal. Senate leaders scheduled a procedural vote for noon on Monday on a bill to reopen the government and extend funding through February 8.

Meanwhile, the NZX 50 index closed 0.55 percent higher at 8,335.36, while at 06:00GMT, the FxWirePro's Hourly NZD Strength Index remained neutral at 70.28 (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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