New Zealand bonds end lower on profit-booking; GDT auction in focus next week

New Zealand government bonds closed lower on Friday as investors cashed in profits after long rally this week. In addition, markets look ahead to the GDT auction scheduled to be held next week.

At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose 2 basis points to 2.885 percent, the yield on 20-year note also climbed 2 basis points to 3.450 percent and the yield on short-term 2-year ended 2 basis points higher at 2.025 percent.

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 0.34 percent higher at 8,061.98, while at 06:00GMT, the FxWirePro's Hourly NZD Strength Index remained highly bearish at -132.73 (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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