Kiwi Bond Investors Bet on Sluggish Growth, Cautious Rate Hikes

Some investors are buying up New Zealand bonds, anticipating that sluggish economic growth will keep interest rates low. According to Insight Investment, this cautious approach by the Reserve Bank of New Zealand has led to a favorable market for the debt.

The asset manager favors bonds with shorter maturities, arguing that the market has already priced in too many rate hikes. As a result, investors are seeing potential for returns in these shorter-term investments.

A steep yield curve and contained government spending also make New Zealand's debt more attractive compared to its Group-of-10 peers, Harbour Asset Management notes.