New Zealand bonds gain at close ahead of GDT price auction; renewed trade tensions weigh on yields

The New Zealand bonds closed higher Tuesday amid a muted trading session that witnessed data of little economic significance ahead of the GlobalDairyTrade (GDT) price auction, scheduled to be held today for added direction in the debt market. Renewed global trade tensions over the United States and China weighed on yields, pushing prices higher.

At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, slipped nearly 1/2 basis point to 2.540 percent, the yield on the long-term 20-year note fell close to 1 basis point to 2.860 percent and the yield on short-term 2-year too closed nearly 1/2 basis point down at 1.655 percent.

Markets await discussions amongst Italy’s political leaders tonight regarding the budget situation. Senior leaders from League (the country’s junior coalition partner) will meet to discuss the policies they plan to include in the 2019 budget and their impact on the fiscal position.

League leader and Deputy Prime Minister Salvini has signalled that Italy’s budget deficit could touch the European Union’s 3% limit on the back of promised tax cuts and new spending. Of interest to markets will be the degree to which Italy’s leaders plan to push the European Union’s budget rules, given Italy’s already huge levels of government debt.

Meanwhile, the NZX 50 index closed 0.38 percent higher at 9,292.15, while at 06:00GMT, the FxWirePro's Hourly NZD Strength Index remained neutral at -3.24 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex