New Zealand short-term bonds slump at close in muted trading tracking cues from rise in latest GDT price index

New Zealand government bonds jumped at the time of closing Wednesday, tracking a solid jump in dairy product prices at Fonterra's GlobalDairyTrade auction amid concerns about a decline in the country’s supply following dry weather conditions.

At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, slumped 2 basis points to 2.89 percent, the yield on 20-year also plunged 2 basis points to 3.36 percent and the yield on short-term 2-year ended 1 basis point lower at 2.00 percent.

New Zealand’s REINZ house price index rose 0.8 percent in seasonally adjusted terms, with the gains spread fairly evenly across the country. Auckland house prices have now fully reversed the decline seen over the first half of 2017. Outside Auckland, house prices were 6.8 percent higher than a year ago.

The GDT price index rose 4.9 percent from the previous auction two weeks ago. The average price was USD3310 (NZD4634) a tonne. Some 23,319 tonnes of product was sold, down from 25,400 tonnes two weeks ago. Whole milk powder climbed 5.1 percent to USD3010 a tonne. Further, at the latest GDT auction, butter jumped 8.8 percent to USD4897 a tonne, while skim milk powder rallied 6.5 percent to USD1818 a tonne.

Meanwhile, the NZX 50 index closed 0.30 percent lower at 8,272.67, while at 06:00GMT, the FxWirePro's Hourly NZD Strength Index remained highly bullish at 140.01 (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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