New Zealand bonds gain modestly ahead of Q1 CPI

The New Zealand bonds modestly gained Wednesday as investors are curiously eyeing the country’s consumer price inflation (CPI) for the first quarter of this year, scheduled to be released on April 20.

The yield on the benchmark 10-year bond, which moves inversely to its price, fell 1 basis point to 2.93 percent, the yield on 7-year note slipped 1/2 basis point to 2.64 percent and the yield on short-term 2-year note slumped 2-1/2 basis points to 2.12 percent by 04:50GMT.

CPI data due this week should show headline inflation back at target (or close to it), but the broader inflationary pulse will likely remain tame. Dairy prices are expected to lift modestly. Further, currency signals remain mixed as cyclical, secular, and political dynamics collide.

"Headline inflation will be higher, but we don’t think an outcome at or near target changes the outlook for the OCR, given the role played by base effects and the benign state of inflation outside of housing, as our Inflation Gauge showed last week," ANZ Research commented in its latest research report.

Meanwhile, the New Zealand’s benchmark S&P/NZX 50 Index fell 0.44 percent to 7,202.12 by 05:10GMT, while at 05:00GMT the FxWirePro's Hourly NZD Strength Index remained neutral at -26.28 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex