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US job openings rise, layoff fall; US deficit on track; Fitch raises NZ growth forecast; Stevens says low rates can't fix growth; UST 10yr yield at 1.52%; NZ CDS spreads fall; oil slips, gold up; NZ$1 = 72.3 US¢, TWI-5 = 75.2

US job openings rise, layoff fall; US deficit on track; Fitch raises NZ growth forecast; Stevens says low rates can't fix growth; UST 10yr yield at 1.52%; NZ CDS spreads fall; oil slips, gold up; NZ$1 = 72.3 US¢, TWI-5 = 75.2

Here's my summary of the key events overnight that affect New Zealand, with news all eyes today will be on Graeme Wheeler and his latest Monetary Policy Statement.

But first, in the US, job openings increased in June and layoffs dropped to their lowest in nearly two years as labour market conditions tightened further.

The latest update on the US Federal budget deficit shows little change from its track to come in well under -3% of GDP, a level they can easily afford.

In New Zealand, Fitch Ratings has affirmed our sovereign Long-Term Foreign-Currency Issuer Default Rating at 'AA' and its Long-Term Local-Currency rating at 'AA+'. Their Outlook for us is Stable. They have raised their forecast for GDP growth to +2.7% for 2016 and 2017, from +2.4% and +2.6%, respectively, and they see the current account deficit staying unchanged at -3.0% of GDP. Housing is a vulnerability they say, but they like the measures the RBNZ is taking to keep a lid on this.

In Australia, RBA governor Glenn Stevens delivered his final speech before retiring next month, saying Australia's economic recovery can’t be achieved through lower interest rates alone. He said government spending had to play a role, as long as it was targeted on projects likely to create jobs and support productivity growth. “We can’t just assume that monetary policy can simply dial up the growth we need. We need some realism here,” he said. This speech actually triggered a rise in the AUD.

In New York, the UST 10yr yield is lower today at 1.52%. The return on some UK government debt turned negative earlier today after the Bank of England missed its target in a new bond buying operation. Gilts maturing in 2019 and 2020 are now yielding -0.1%. They may no be making a yield, but the price gains are what bond investors are after and what they are getting. Hard to call bond investing "fixed income investing" these days in some countries. And our own 10yr swap rate starts today at an historic low of just 2.41%.

And we should also note - related perhaps to that Fitch rating update - NZ's sovereign risk weighting as measured by CDS spreads, has fallen to a new low of just 23 bps. That a drop by a half since the start of the year and bolsters the country's financial reputation.

The US benchmark oil price has slipped a little more today and is now under US$42/barrel and the Brent benchmark is just over US$44/barrel. They fell after weekly American inventory data showed that their stocks of crude oil and other petroleum products rose last week to a record high.

The gold price is slightly higher again and now at US$1,345/oz.

The NZ dollar is higher by more than ½c from this time yesterday at 72.3 US¢, at 93.5 AU¢, and at 64.6 euro cents. The TWI-5 index is at 75.2. Check back here at 9am to see how it reacts to the RBNZ Monetary Policy Statement.

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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7 Comments

i am picking .5 drop today and banks passing on .35 to .4

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On that basis the RBNZ will definitely be accused of flagrantly giving money away if yesterday's trades are an indication of it's intent. View RB Bill trades

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How wrong you are

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But first, in the US, job openings increased in June and layoffs dropped to their lowest in nearly two years as labour market conditions tightened further.

Subject to revision.

In yet another stunning tribute to the "accuracy" and "consistency" of economic propagandadata being reported by our government agencies, the Bureau of Labor Statistics yesterday reported a massive downward revision of the 1Q 2016 YoY real wage growth from +4.2% to -0.4% (a 4.6% swing). Read more and more

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Hard to call bond investing "fixed income investing" these days in some countries. And our own 10yr swap rate starts today at an historic low of just 2.41%.

Sovereign states crowding out the trade for their own failing purposes?

Moments before today's auction printed just after 1.01pm Eastern, the When Issued was trading at 1.505%, virtually unchanged from last month's 1.504%, yet what a difference a month makes. Whereas last month the 10Y came with a high yield that tailed by 1.2 bps as Indirect bidders tumbled to the lowest since January 2015, today we have seen foreign central banks flood right back, as Indirects took down a whopping 72.2%, just shy of the all time high seen back in May when Indirects were responsible for 73.5% of the issue. Read more

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Where will they live? Govt issues over 200,000 visas for people to come and work in NZ.

http://www.stuff.co.nz/business/83041105/record-work-visa-numbers-show-…

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and this:
The public is calling on John Key's government to cut immigration, according to a clear majority in the latest Newshub-Reid Research poll.

The poll shows that 60 percent of Kiwis want fewer immigrants let in.

The pressure to deal with immigration is yet another problem for the Government, with the poll also showing that 75 percent say it is not doing enough to control the housing market.

The poll also shows National voters are strongly supportive of reducing immigration - 59 percent are in support.

Read more: http://www.newshub.co.nz/politics/poll-kiwis-want-to-cut-immigration-20…

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