New Zealand's 10-Year Yield Slides Below 1% for First Time
(Bloomberg) -- New Zealand’s 10-year bond yield slipped below 1% to a fresh record low as renewed U.S.-China trade woes added to the appeal of haven assets and as speculation rose that the nation’s central bank will cut interest rates further.
The benchmark yield fell as much as three basis points to 0.981%. Yield on 2-year New Zealand government debt was one basis point lower at 0.744%. China on Thursday called looming U.S. tariffs a violation of accords reached by Presidents Donald Trump and Xi Jinping, vowing retaliation.
The Reserve Bank of New Zealand cut interest rates by a deeper-than-expected half a percentage point in August to a record low 1%. Governor Adrian Orr signaled further easing could be on the cards and hinted at non-conventional policy amid a worsening global outlook in the wake of the U.S.-China trade conflict.
The central bank could cut rates to minus 0.35% -- the lower bound for the official cash rate -- in a crisis, New Zealand’s Treasury Department has said.
“Major global central banks are easing, and the fall in global yields will ripple to New Zealand,” said Imre Speizer, head of New Zealand strategy at Westpac Banking Corp. in Auckland. “We expect the RBNZ to cut the OCR another 25 basis points to 0.75% in November and retain an easing bias.”
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