(Bloomberg) – New Zealand’s short-term bonds are facing their toughest period in a month. Traders are taking profits after a significant price surge and reassessing expectations for central bank actions.
Recently, yields on two-year notes increased for three consecutive days, reaching 3.83%. This marks the longest stretch of increases since December. The benchmark ten-year notes also saw a rise, climbing for the eighth time in nine sessions to hit 4.77%, the highest since June.
This downturn follows a year in which New Zealand’s bonds outperformed those in other developed markets. The Reserve Bank of New Zealand has been actively lowering interest rates to support an economy grappling with recession.
Global factors, including inflation concerns linked to the new U.S. administration and strong U.S. job data, have led to changes in how traders view central bank rate paths worldwide. As a result, New Zealand’s debt has struggled this week, becoming the weakest performer among major bond markets.
Experts predict that this selling trend may continue. Speculators are lowering expectations for further interest rate cuts this month, indicating a gradual recovery in the economy. Stuart Ritson, a strategist at Bank of New Zealand, believes that the current projections for the official cash rate are too high and will likely drop as the situation evolves.
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Source linkNew Zealand, Bloomberg, Reserve Bank of New Zealand, losing streak, sovereign bonds
