New Zealand long-term bond yields slump at close after U.S. Treasuries recover slightly; March trade balance data in focus

New Zealand’s long-term bond yields slumped at the time of closing Tuesday after the United States Treasuries started to recover post a day of recognition as yields braced to touch the 3.00 psychological mark for the first time since January 2014.

Investors will now remain focused on the country’s trade balance data for the month of March, scheduled to be released on April 26 by 22:45GMT for further direction in the debt market. Also, NZ markets will remain closed on April 25 on account of ANZAC Day.

The yield on New Zealand’s benchmark 10-year Treasury note, which moves inversely to its price, slumped 2 basis points to 2.91 percent, the yield on the long-term 20-year note plunged 3 basis points to 3.48 percent and the yield on short-term 2-year too closed 3 basis points lower at 1.93 percent.

Market sentiment consolidated overnight affected by multiple factors including higher yields, mixed earnings, still solid US growth data and eased sanctions on Russian aluminum producer Rusal. The US 10-year Treasury yield ended closer to 3 percent, temporarily paused the further flattening of the yield curve. Although the flattening yield curve has raised the concerns about the potential economic slowdown in the coming years, the recent data from the US shows that the near-term outlook remains solid.

In its latest CPC Politburo meeting, China’s top policymakers said the country will use market-based measures to reduce overcapacity, China will also provide support to new sectors and new business models though it did not specify the details.

Lastly, China reiterated to stick to proactive fiscal policy and prudent monetary policy. Three key areas including containing financial risk targeted poverty reduction and fighting pollution will be the key focus.

Meanwhile, the NZX 50 index closed 0.18 percent lower at 8,288.64, while at 05:00GMT, the FxWirePro's Hourly NZD Strength Index remained highly bearish at -170.88 (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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