New Zealand bonds jump at close ahead of May trade balance data, RBNZ’s monetary policy meeting

New Zealand bonds jumped at the time of closing Monday as investors wait to watch the country’s trade balance data for the month of May and the Reserve Bank of New Zealand’s (RBNZ) monetary policy meeting, scheduled for June 26 and 27 by 22:45GMT and 21:00GMT respectively.

At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, slumped 2 basis points to 2.95 percent, the yield on the long-term 20-year note slumped 2-1/2 basis points to 3.27 percent while the yield on short-term 2-year closed flat at 1.92 percent.

Reserve Bank Governor Adrian Orr has another easy Official Cash Rate (OCR) decision on his hands this week, with all major bank economists picking no change. But looming issues, such as low business confidence and ongoing Mycoplasma Bovis eradication concerns, may see the OCR remaining on hold for longer than previously expected.

Issues around trade protectionism, given the prospects of a trade war between China and the US, may also receive a mention in Orr’s statement. Inflation will continue to be a key factor in the Reserve Bank’s OCR judgment. In May, the Central Bank sent a very clear message that it is determined to meet its inflation target, with an OCR move up or down equally likely.

Meanwhile, the NZX 50 index closed 0.03 percent lower at 8,996.24, while at 06:00GMT, the FxWirePro's Hourly NZD Strength Index remained neutral at -11.94 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex