Waiting for Powell's Jackson Hole speech; US data sluggish; US regional bank ratings get trimmed; Panama drought affects canal passage; Korea confident; UST 10yr 4.33%; gold firm and oil dips again; NZ$1 = 59.5 USc; TWI-5 = 68.6

Here's our summary of key economic events overnight that affect New Zealand, with news global markets await signals from Jackson Hole at the weekend.

In the meantime in the US, there was an unusual surge in retail sales at bricks & mortar stores last week, reporting their strongest week-on-week gain in four months (+2.9% from a year ago). And it is the first time that rise has matched inflation in 2023.

But US existing home sales came in very sluggish. The American housing market remains in the doldrums, with an annualised sales rate of 4.07 million units in July 2023, the lowest level since January and below market expectations of 4.15 million. That's more than -16% below year-ago levels. They have 14 weeks of unsold inventory on hand now. Higher mortgage rates and limited inventory continued to be the main factors behind the decline with sellers not really interested in participating in a falling market.

'Sluggish' is also the word to describe the next regional factory survey, this one from the Richmond Fed in the mid-Atlantic states region. But more measures 'improved' including for new orders, even if the 'improvement' is just a lesser decline in this region. Interestingly however, this is another region where manufacturers are looking ahead to much better outcomes, so are still hiring and investing.

And staying in the US, S&P has followed Moody's in trimming the ratings of a set of regional banks. Many depositors have "shifted their funds into higher-interest-bearing accounts, increasing banks’ funding costs," S&P wrote in a note summarising the moves. "The decline in deposits has squeezed liquidity for many banks while the value of their securities, which make up a large part of their liquidity, has fallen." Federally insured banks were sitting on more than US$550 bln in unrealised losses on their available-for-sale and held-to-maturity securities as of mid-year, S&P said.

South in Panama, they have a persistent drought, and it is one that in affecting ships in the Panama Canal. Ships must now enter only part-loaded to navigate the lower water levels, and the average wait time to enter is now more than 80 hours, more than double the usual wait time. That will have a significant impact on trade and freight rates you would assume.

Across the Pacific, given all the challenges the country faces, within and from its northern neighbour, it is perhaps surprising that consumer sentiment is holding up very well in South Korea, better than analysts had expected. The results of their business sentiment survey will be released later today.

As you will note in the next item, the benchmark UST 10yr has recently risen sharply to a new 'recent high'. But we should keep in mind that this is still well below the long-run average for this rate, which over the past 60 years was 5.88%. From 1963 until the end of 1979 the average was 6.31%. From 1980 for the next 20 years it was 8.62%. For the subsequent ten years until the end of 2009 it was 4.46%. And for the 13 years since, it has averaged just 2.32%. Today's 4.33% is 'nothing special', despite all the current angst.

The UST 10yr yield will start today at 4.33%, down -1 bp from this time yesterday, although that is still unusually high and just off yesterday's ten year high. Their key 2-10 yield curve inversion is a bit deeper at -71 bps. Their 1-5 curve is essentially unchanged at -92 bps. Their 3 mth-10yr curve is also little-changed at -106 bps. The Australian 10 year bond yield is now at 4.25% and down -4 bps from yesterday. The China 10 year bond rate is up +2 bps at 2.55%. And the NZ Government 10 year bond rate is up +10 bps, now at 5.22%, and a new 12 year high.

Wall Street is marginally softer with its Tuesday session down -0.1% on the S&P500. Overnight, European markets were mixed with London up +0.2% while Frankfurt and Paris were up +0.6%. Tokyo ended its Tuesday session up +0.9% and Hong Kong ended up +1.0% while Shanghai was also up +0.9%. Yesterday, the ASX ended up +0.1%, and the NZX50 was up +0.2% in its Tuesday trade.

The price of gold will start today at US$1897/oz and up +US$3 from this time yesterday.

And oil prices are down another -50 USc at just on US$79.50/bbl in the US. The international Brent price is now just at US$83.50/bbl.

The Kiwi dollar starts today about +¼c firmer at just under 59.5 USc. Against the Aussie we are firm at 92.6 AUc. Against the euro we are +½c higher at 54.9 euro cents. That all means the TWI-5 is at 68.6 and up +30 bps from yesterday.

The bitcoin price is a little lower again today and now at US$25,838 and down -0.8% from yesterday. Volatility over the past 24 hours has been low at just under +/- 1.0%.

In many developing countries, adopting crypto assets as currencies has appealed as a low-cost solution to combat persistent inflationary pressures. But new research shows these benefits have not come. What has come are "amplified financial risks". This is according to new research by the Bank of International Settlements.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».