Here's our summary of key economic events overnight that affect New Zealand with news equity markets are nervous about the tapering decisions about to come from the US Fed - but the bond markets don't seem quite as worried.
The pressure is squarely on the US Fed FOMC members "to act" as inflation signals grow louder. Today the US producer price index (PPI) topped estimates, estimates that were already factoring in sharp rises. PPI rose +9.6%, its largest annual increase since this data series started ten years ago. Analysts had expected a +9.2% advance, itself a sharp rise from the October +8.6%. (And core PPI rose in November than October at a much faster rate than expected, so things are well embedded.)
Meanwhile, US retail sales are holding up in the end-of-year holiday selling season. But it is hard to know how much of the strong +16% year-on-year value gains are related to sharply inflated prices. Certainly it will be more this year. Inflation expectations now seem well embedded.
In the US Congress, and in contrast to the usual partisan bickering, later today they are expected to raise their formal debt ceiling government borrowing limit by +$2.5 tln to US$31 tln, or about 34% more than their annual GDP.
In China, there are growing reports of industry closures in a set of key industrial cities, closed to slow the spread of the pandemic. This will be just another problem for global supply chains. It will probably also be just another piece of evidence China is fading as an engine of global economic growth.
In Europe, industrial production rose +1.1% in October from September, up +3.3% from a year ago, rebounding from two consecutive months of contraction. Capital goods output jumped +3.0% and the production of durable consumer goods, such as televisions and washing machines, advanced +1.7% month-on-month. However, despite the apparent overall positive tone, these are not standout results, more like marking time.
EU natural gas prices have raced to new record highs overnight on a building cold snap in the region, and fears of supply disruptions from Russia as it tries to weaken the EU's ties to Ukraine.
In Australia, the widely-watched NAB business confidence survey fell away in November - and the October data was revised lower. But it remains above its long-run average. At least part of that is because businesses report some success in being able to pass on higher costs, and those include faster rising labour costs.
And staying in Australia, pandemic cases in Victoria were 1189 reported yesterday. There are now 11,051 active cases in the state - and there were another 6 deaths. In NSW there were 804 new community cases reported yesterday, another jump, with 5,079 active locally acquired cases, and one death. Queensland is reporting no new cases. The ACT has 4 new cases. Overall in Australia, just under 89.3% of eligible Aussies are fully vaccinated, plus 4% have now had one shot so far.
The UST 10yr yield opens today at 1.44% and up +3 bps from this time yesterday. The UST 2-10 rate curve starts today unchanged at +78 bps. Their 1-5 curve is steeper at +98 bps, while their 3m-10 year curve is also steeper at +142 bps. The Australian Govt ten year benchmark rate has bounced back +4 bps to 1.59%. The China Govt ten year bond is unchanged at 2.86%. The New Zealand Govt ten year is -4 bps lower at 2.35%.
Wall Street has opened its Tuesday session sharply lower, with the S&P500 down -2.2% in afternoon trade and falling. Overnight European markets fell -0.6% but London was flat. Yesterday, Tokyo closed down -0.7%, Hong Kong closed down -1.3%, while Shanghai fell -0.5% on the day, all with building retreats. The ASX200 ended flat while the NZX50 gave up some of its Monday gain, falling -0.5%.
The price of gold will start today at US$1774/oz and down -US$15 from this time yesterday.
And oil prices start today -US$1.50 lower at just over US$69.50/bbl in the US, while the international Brent price is now just over US$72.50/bbl.
The Kiwi dollar opens today marginally softer at 67.5 USc. Against the Australian dollar however we are marginally firmer at 95 AUc. Against the euro we are little-changed at 59.9 euro cents. That means our TWI-5 starts the today essentially unchanged at 72.2 and still its lowest in four months.
The bitcoin price is soft at US$46,758 but only down -0.5% from this time yesterday. Volatility over the past 24 hours has been moderate at just on +/- 2.4%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».