Here's my summary of the key events overnight that affect New Zealand, with news of draconian export controls coming in Australia.
But first, the White House has launched its much-awaited 'tax reform' plan. It would reduce the corporate rate to 15% from 35%, and reduce the top individual rate to 35%. Lower brackets would be condensed and set at 10% and 25%. The plan would end deductions for state and local taxes, and the Alternative Minimum Tax (AMT) would be repealed. (The AMT was the only thing that caught Donald Trump and had him paying any tax at all in 2005.) It would also repeal some special taxes for people with in incomes above $200,000 per year, and repeal estate taxes for people with assets over NZ$8 mln. Itemised deductions for home mortgage interest and charitable contributions will be preserved.
And Trump is proposing a 'repatriation holiday' for cash earnings of US companies from their overseas subsidiaries. Basically its a tax-free pass. If it becomes law, it will drive the USD higher, and potentially reduce global M&A noticably. It will also see US shareholders showered with additional payouts.
Meanwhile, Congress moved closer to a deal to avoid a government shutdown at the stroke of midnight on Friday US time, as negotiators worked to clear away remaining disputes in a massive spending bill.
In the UK it is becoming clear that London will lose its status as the EU's main financial hub. Because about 80% of foreign exchange trading and 30% of all bank lending in the EU flows through London, most of that will need to be re-routed through an EU centre after Brexit. And that means a huge change is coming, according to the French finance minister. The biggest sector seen moving is euro-denominated clearing the huge value in derivatives products traded every day to insure companies against interest rate changes, currency fluctuations and inflation risk. The EU sees it as an issue of sovereignty and security of European monetary markets and are unlikely to compromise on the issue. After the EU's own institutions, American banks will be the first to make the switch. And that may leave London a shadow of itself in the financial world.
In Australia, the focus is going on 'rental affordability' especially in the key cities of Sydney and Melbourne. They define it as spending no less than 30% of take-home pay on rent if you are a low income household. And one group has declared Sydney in a 'crisis'.
And the Australian crisis over its domestic gas supply is reaching breaking point. The gas production companies are all committed with export sales and 'negotiations' to remedy the local situation have gone nowhere. So now Canberra is to impose stiff export controls to force the producers to divert supplies.
Back at home, Finance Minister Steven Joyce is giving a pre-Budget speech in Wellington just before 1pm today. He'll be making the first of the Budget infrastructure announcements. More on that later today.
In New York, the UST 10yr yield is down today and now at 2.31%.
Oil prices are slipping lower at now just under US$49.50 for the US benchmark, while the Brent benchmark is now just over US$51.50 a barrel.
The gold price is unchanged at US$1,263/oz.
The New Zealand dollar is lower again today at 68.9 USc its lowest level this year. On the cross rates the Kiwi dollar is at 92.2 AU¢ and against the euro at 63.2 euro cents. The NZ TWI-5 index is now at 73.7 a new nine month low.
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 ».
We welcome your comments below. If you are not already registered, please register to comment
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.