New Zealand bonds end higher on weak risk appetite; U.S. threatens extra tariffs on $200bln of Chinese goods

New Zealand government bonds ended Tuesday’s session on a higher note after U.S. President Donald Trump threatens with extra tariffs on $200bln of Chinese goods, intensifying trade war fear among investors.

At the time of closing, the yield on the New Zealand benchmark 10-year note, which moves inversely to its price, slumped 4 basis points to 2.880 percent, the yield on the long-term 20-year fell 5 basis points to 3.195 percent and the yield on short-term 2-year too closed nearly flat at 1.890 percent.

Global risk sentiments remained handicapped by swirling US-Sino trade tensions, especially after US President Trump directed the USTR to identify US$200 billion worth of Chinese goods for additional 10% tariffs as China “has no intention of changing its unfair practices related to the acquisition of American intellectual property and technology”.

US Secretary of State Pompeo also called Chinese appeals for greater trade openness and globalization “a joke” and its IP theft “an unprecedented level of larceny”.  With the threat of another trade skirmish, The Dow Jones closed lower for its fifth session, albeit UST bond yields drifted higher overnight.

Meanwhile, the NZX 50 index closed 0.77 percent lower at 8,905.21, while at 05:00GMT, the FxWirePro's Hourly NZD Strength Index remained neutral at -45.15 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visithttp://www.fxwirepro.com/currencyindex