New Zealand bonds join chorus for safe-haven demand tracking U.S. Treasuries on Italy’s nervous political condition

New Zealand bonds joined the global chorus for safe-haven demand at the time of closing Tuesday, tracking a similar movement in the U.S. counterpart, as Italy’s political matter started getting worse and hence, investors shifted to risk-averse assets like debt papers.

At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, slipped 1 basis point to 2.76 percent, the yield on the long-term 20-year note slumped 2 basis points to 3.27 percent and the yield on short-term 2-year closed 2-1/2 basis points lower at 1.88 percent.

Treasury yields plunged by the most since Brexit on Tuesday as Italy’s political crisis spurred investors to seek out the safety of US government debt and ratchet down the odds of Federal Reserve rate hikes.

Investors said the intensity of the moves in Treasuries was likely caused by the wrong-footing of hedge funds that had been betting on US government bond yields rising, with the sudden rally forcing them to scramble to cover short positions, Financial Times reported.

Meanwhile, the NZX 50 index closed 0.14 percent higher at 8,647.86, while at 06:00GMT, the FxWirePro's Hourly NZD Strength Index remained neutral at 22.51 (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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