New Zealand bonds slump at close as investors shrug-off fall in global dairy prices

New Zealand government bonds slumped at the time of closing Wednesday after investors have largely shrugged-off the decline in dairy prices at the latest GlobalDairyTrade (GDT) price auction held overnight.

The yield on New Zealand’s benchmark 10-year Treasury note, which moves inversely to its price, jumped 5 basis points to 2.79 percent, the yield on the long-term 20-year note surged 3-1/2 basis points to 3.37 percent and the yield on short-term 2-year too closed 3-1/2 basis points higher at 1.93 percent.

The GDT price index slipped 0.6 percent from the previous auction two weeks ago. The average price was USD3,477 a tonne. Some 17,222 tonnes of product was sold, down from 18,635 tonnes two weeks ago. Whole milk powder rose 1.6 percent to USD3,278 a tonne.

Futures markets had indicated average prices across all products would remain flat. This is the fourth consecutive decrease to the GDT index, following a bright start to the year with three increases in January and early February. Analysts are closely watching the auction to gauge the effect the trade spat between the United States and China might have on the New Zealand dollar, reports said.

Meanwhile, the NZX 50 index closed 0.82 percent higher at 8,398.08, while at 06:00GMT, the FxWirePro's Hourly NZD Strength Index remained slightly bullish at 87.40 (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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