New Zealand bonds surge at close in muted trading; investors eye GDT price auction early next week

New Zealand government bonds surged on the last trading day of the week as investors remained side-lined in any major trading activity amid lack of major economic data. Also, investors will be eyeing the GlobalDairyTrade price auction to be held early next week for further direction in the debt market.

At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, slipped 1-1/2 basis points to 2.87 percent, the yield on 20-year slumped 2 basis points to 3.34 percent and the yield on short-term 2-year ended 2-1/2 basis points lower at 1.98 percent.

The country’s number of dwelling consents rose 10.8 percent m/m (sa) in November, effectively reversing October’s 10.4 percent m/m fall. Both moves were led by the volatile multi-dwelling component, which rose an estimated 38 percent m/m. Issuance for ‘houses’ fell 1.3 percent m/m, its fourth consecutive fall.

Looking through the monthly volatility, Statistics NZ trend estimates continue to grow. The nationwide trend measure is running at a 0.6 percent m/m run-rate, and is up 11 percent y/y. However, as a clear sign to treat this measure with plenty of caution, every region is actually showing a stronger pace of trend growth at present, which is hard to square.

Meanwhile, the NZX 50 index closed 0.10 percent lower at 8,242.35, while at 05:00GMT, the FxWirePro's Hourly NZD Strength Index remained slightly bullish at 93.96 (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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