Here's my summary of the key events overnight that affect New Zealand, with news there may actually be criminal charges brought against the traders who fixed currency trading in London.
But first, core indicators of international trade seem healthy. Air cargo data for the seasonal peak month of November shows a +6.8% rise from the same month a year ago, even though the industry added +4.4% more capacity. Growth was very strong everywhere, except Latin America. And for those that still follow it, we should note that the Baltic Dry Index rose from 429 at the start of 2016 to 961 at the end, more than a +100% gain.
In the US, the Federal Reserve said it will pay a 'dividend' of US$92 bln in profits to the US Treasury for 2016. The figure is down from the US$98 bln that the central bank's 12 regional banks paid back in 2015. The Fed earns interest on government bonds if holds, most of them bought during the GFC. As at December, it alone held US$5.5 tln of the Federal Government debt, or 28% of it.
Bloomberg is reporting that prosecutors are poised to charge the currency traders at the heart of one of the biggest market-rigging investigations. The imminent criminal charges are against members of ‘The Cartel’ chat group who used instant messages to coordinate the rigging of foreign-exchange benchmarks by sharing confidential customer information. Unfortunately, the process could take a long time because all of them live or work in London and extradition will be required to get them to court.
Data out in China yesterday shows that CPI inflation there was up +2.1% in 2016. China inflation levels have large international ramifications. Even more influential is their Producer Price inflation, and that has turned around remarkably. In 2015 that was actually deflation of -5.9% whereas in 2016 it has turned into inflation of +5.5%. Now, that is fast-rising in anyone's language. Part of this rise is because iron ore and coal cost them much more.
Staying in China, data out overnight shows that 23.9 mln cars were sold in China last year, a +15.9% rise. That is the fastest rate of growth in three years. But a tax incentive may have something to do with the size of the gain.
In Australia, Rabobank is predicting that 2017 milk production there will fall to a 20 year low.
In New York, the UST 10yr yield is essentially unchanged today and now at 2.39%.
Oil prices are about -US$1 lower today following a similar fall yesterday, now just under US$51.50 for the US benchmark, while the Brent benchmark is now just on US$54.50 a barrel. The US is now expected to raise crude output by +300,000 b/d by 2018. That is +4.5% higher than for 2016.
The gold price is firmer again today, up +$11 from this time yesterday at US$1,189/oz.
The New Zealand dollar is marginally softer and now at 69.9 US¢. On the cross rates it is holding at 94.9 AU¢, and against the euro up at 66.2 euro cents. The NZ TWI-5 index has slipped to 76.2.
And in related currencies news, it has been revealed that bitcoin transactions out of China accounted for 98% of all bitcoin transactions in the July-December 2016 period. Using bitcoin to avoid Chinese capital controls has brought warnings from the Chinese central bank.
If you want to catch up with all the changes yesterday, we have an update here.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».