New Zealand bonds jump at close as uncertainty hovers over government formation

The New Zealand bonds jumped at the time of closing Friday as uncertainty continued to hover around the possible formation of a government in the country as votes still remain on the counting.

At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, hovered around 3.00 percent, the yield on 7-year note flat at 2.85 percent and the yield on short-term 2-year ended 1 basis point lower at 2.10 percent.

New Zealand Prime Minister Bill English has said it could take weeks for the country to form a new government after a weekend general election left a nationalist minor party in the role of kingmaker.

The Nationals secured 58 seats ahead of a possible coalition of 52 seats between Labour, which experienced a surge in popularity under new leader Jacinda Ardern, and the Green Party. That left both still needing NZ First's nine seats to reach the 61 seats required to form a government.

A final tally of the election results is due on October 7, when "special votes", which will make up 15 percent of the total and which includes overseas votes, are released.

Meanwhile, the NZX 50 index closed 0.21 percent higher at 7,930.40, while at 06:00GMT, the FxWirePro's Hourly NZD Strength Index remained neutral at 9.48 (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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