Here's our summary of key economic events overnight that affect New Zealand, with news of a global economy finding momentum hard to regenerate.
In there US there were two competing second-tier sentiment surveys out overnight. The The IBD/TIPP Economic Optimism Index of consumer sentiment fell more than expected, whereas the Small Business Optimism Index rose to a 7 month high.
But not helping is that last week retail sales are now lower than a year ago levels (on a same-store basis) and that really means a volume loss due to inflation's impact.
Meanwhile, regulator action against "junk" bank fees has forced Bank of America to refund IS$100 mln to its customers and fined it $150 mln.
In parts of the US, milk production is rising and so fast that farmers can't sell it.
In China, they are seeing 'progress' getting loans out the door. They need the stimulation. China's banks provided ¥3.05 trillion in new yuan loans in June, a substantial increase from ¥1.36 trillion in the previous month and well above market expectations of ¥2.34 trillion. It was also the largest amount of new bank loans for a June month since at least 2004, as demand for credit increased after the People's Bank of China reduced its key lending rates on June 20th for the first time since August.
Beijing seems very conflicted. After passing a draconian and opaque national security law that suddenly undermined investor appetites for investing there, top officials are now going on a charm campaign to woo some of it back.
In Japan, speculation is mounting that the Bank of Japan will adjust its ultraloose monetary policy as soon as this month in response to recent economic data, driving the yen to its strongest against the US dollar in about a month.
In Australia, the Westpac-Melbourne Institute Consumer Sentiment index rose by +2.7% in July from June to a 3-month high. That matched matched the market consensus for this marker. The latest result followed a +0.2% gain in June as inflation eased and the RBA skipped further monetary tightening. But it was a minor gain and overall sentiment remains very low.
Household spending was up just +3.3% in May in Australia compared to the same month a year ago. That is way less than inflation. And discretionary spending is now going backwards, falling for a second month in a row. It hasn't done that since the start of the pandemic.
On the business side, The widely-respected NAB business sentiment survey "improved" from a negative reading to "zero", neither positive nor negative.
In the aftermath of the EU-NZ trade deal signing, the Australians have rejected their EU offer. "More work needs to be done" (which really means the EU needs to climb down from its high horse and make sensible compromises) before they can get a deal over the line. New Zealand had to swallow EU rats for their deal, something Australia doesn't need to do. It already has an amazingly healthy trade situation so it is in a good position in these negotiations.
The UST 10yr yield will start today at 3.97% and down -2 bps from this time yesterday. Their key 2-10 yield curve inversion is slightly deeper at -91 bps. Their 1-5 curve is also slightly much more inverted at -119 bps. And their 3 mth-10yr curve is more inverted at -130 bps. The Australian 10 year bond yield is now at 4.17% and down another -5 bps from yesterday. The China 10 year bond rate is holding lower at 2.69%. The NZ Government 10 year bond rate has fallen sharply, down -12 bps from yesterday to 4.83%.
On Wall Street, the S&P500 is up +0.3%. Overnight, European markets all rose but in a wide range. London was up only +0.1% through to Paris that was up +1.1%. Yesterday, Tokyo ended it Tuesday session unchanged while Hong Kong was up +1.0%. Shanghai ended up +0.6%. The ASX200 finished with a very good +1.5% gain while the NZX50 ended essentially unchanged.
The price of gold will start today at US$1932/oz and up +US$6 from yesterday.
And oil prices are +US$1.50 higher at just over US$74.50/bbl in the US. The international Brent price is now at just over US$79/bbl.
The Kiwi dollar starts today a little softer at just over 61.9 USc. Against the Aussie we are slightly firmer at just under 92.8 AUc. Against the euro we are lower at 56.3 euro cents. That means the TWI-5 is now just under 70 and down -30 bps from yesterday.
The bitcoin price has risen from this time yesterday and now is at US$30,615 which is a +1.5% move higher. Volatility over the past 24 hours has been modest at just under +/- 1.2%.
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