Here's my summary of the key events overnight that affect New Zealand, with news firstly from China.
Consumer inflation there took a sharper-than-expected shift lower in October at +1.3%. Markets were expecting +1.6%. Worse, China's producer price deflation is now running at -5.9%, a level it has maintained for the past three months and can't seem to shake. Everything hangs on the resilience of China's large service sector. Chinese retail sales data is due out later today for October. But with CPI falling, expect some significant stimulus soon.
Similarly, in the US where cheap oil, a strong currency and slower growth overseas are all keeping import and export prices low, even negative.
But American wholesale trade data came in better than markets were expecting. They were expecting another small dip in sales following a rather large dip in August. What they got was a reassuring rise in sales along with an unexpected rise in inventory levels. Firms are building for stronger future demand, it seems.
In New York, the UST 10yr yield benchmark consolidated its recent gains today, slipping marginally to 2.35%. Equity prices are lower across the board.
The US benchmark oil price inched higher today, now just under US$45/barrel, and the Brent benchmark is at US$48/barrel. The International Energy Agency noted very large reductions in investment in the sector overnight but this has not affected market pricing much at all given the broader picture of oversupply.
The gold price gained a few dollars and is now at US$1,091/oz. But that may be about to change as a huge new gold field has been discovered off the coast of China.
The New Zealand dollar starts today marginally higher at 65.3 US¢, at 92.9 AU¢, and at 61.1 euro cents. The TWI-5 is at 71.3.
Don't forget to check back at 9am for full coverage of the Reserve Bank's financial stability review.
If you want to catch up with all the local changes yesterday, we have an update here.
The easiest place to stay up with event risk today is by following our Economic Calendar here »
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9 Comments
meanwhile macdonalds announced due to cheap credit they will borrow to return up to 30 Billion to shareholders.
http://mcdonalds.q4web.com/financial-news-release/news-release-details/…
Not borrowing to expand, or buy something but to improve its share price
cheap credit is distorting assets everywhere
Corporate leverage is now at its highest level in a decade, according to a new analysis from Goldman Sachs. Read more
Some are taking advantage of perceived balance sheet weakness - The SEC has faced calls from the New York Stock Exchange to force investors to identify the stocks they are short selling. In an Oct. 7 letter, the NYSE urged the regulator to “bring light to a less transparent and increasingly consequential corner of the securities market.” Read more
But, but, but..........according to one of your esteemed commentators yesterday China is merrily growing along at 6.5% per year (because that is what the Chinese government says). Why an earth would 'some significant stimulus soon' therefor be necessary?
What, oh what, am I missing? It is all just sooooooooo confusing.....
There is some good news out there today - Peabody Energy, one of the world's biggest coal companies has had to end misleading statements and disclose risks associated with climate change:
http://www.ag.ny.gov/press-release/ag-schneiderman-secures-unprecedente…
''Attorney General Schneiderman initiated an investigation of Peabody’s financial disclosures in securities filings in 2013. The investigation found that the company repeatedly denied in public financial filings to the Securities and Exchange Commission (SEC) that it had the ability to predict the impact that potential regulation of climate change pollution would have on its business, even though Peabody and its consultants actually made projections that such regulation would have severe impacts on the company. ''
And after that success - the even better news is that the NY Attorney General is now turning his fire on the lies that Exxon spread:
http://www.nytimes.com/2015/11/06/science/exxon-mobil-under-investigati…
Chinese retail sales data is due out later today for October. But with CPI falling, expect some significant stimulus soon.
The very recent heat in 3mth US Tbill yields could be indicative of further Chinese strain related selling. Check 5d tab for evidence - then read more
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