Here's our summary of key economic events overnight that affect New Zealand, with news we are now in the last week before the America's Labor Day holiday, signaling the end of the "sell in May and stay away" hiatus. Financial markets will then come back to full capacity. But what awaits them?
The last big 'holiday season' event is the central banker conference at Jackson Hole.
With his eyes firmly on expected American inflation pressures, Federal Reserve Chair Jerome Powell, speaking at the symposium, emphasised the potential necessity for additional interest rate hikes in order to effectively manage the pressures they still see ahead. Despite currently waning inflation they still have "robust" consumer spending, and an expanding economy he said, and a healthy labour market. However, he did say they could hold rates steady at its next meeting in September.
Market reactions to this closely-watched speech have been modest, although Wall Street equities rose and they have ended with a winning week.
At the same conference a Stanford professor is waning that liquidity risks in the gigantic US Treasury bond market may get worse if another crisis like the March 2020 pandemic shock occurs again. And that is because dealer balance sheets are growing much more slowly than the holdings of US Treasuries (because so much more is being issued). Attempts to sell those down in a financial crisis will get stymied by what dealers can handle without themselves coming unders stress. And that could cause a meltdown. He did have some suggestions.
Meanwhile the one piece of American data that was released today, the University of Michigan consumer sentiment survey, didn't have much impact either. After rising sharply for the past several months, this consumer sentiment indicator moved sideways in August. Still, it was at its second highest reading in 21 months and is now about 39% above the all-time historic low reached in June of 2022.
In China, they said they will scrap a rule that disqualifies people who’ve already had a mortgage from being considered a first-time homebuyer in major cities, the official Xinhua news agency reported. It is couched in slightly different terms, but that will be the effect. It does look like an odd approach to take to spark an uptick in their residential property markets.
Meanwhile, Country Garden isn't getting much support for delaying payments on its bond. Bond holders are digging in.
After peaking in April, it has been downhill for German business sentiment, and it fell again in August in the latest Ifo survey and is back to October 2022 levels.
The UST 10yr yield will start today at 4.24%, up +1 bp from this time yesterday to exactly where it was a week ago. Their key 2-10 yield curve inversion is a bit deeper again at -82 bps. Their 1-5 curve inversion is unchanged at -101 bps. Their 3 mth-10yr curve inversion is also unchanged at -115 bps. The Australian 10 year bond yield is now at 4.14% and up +1 bp from yesterday. The China 10 year bond rate is little-changed at 2.58%. And the NZ Government 10 year bond rate is up +4 bps, now at 5.09%. That is the same as the week-ago level.
Wall Street is in a good mood today with the S&P500 up +0.7% and ended the week up +0.6%. Overnight European markets were less enthusiastic with all little-changed. Yesterday, Tokyo ended its Friday session down -2% to be essentially unchanged for the week. Hong Kong ended down -1.4% on Friday to be up +0.9% for the week. But Shanghai was down -0.6% on the day to be down -2% for the week. The ASX200 ended its Friday session down -0.9% yesterday to be -0.5% lower for the week. The NZX50 was down -0.3% yesterday and down -1.2% from a week ago.
The Fear & Greed index is at neutral now, and little-changed in a week.
The price of gold will start today at US$1913/oz and down -US$4 from this time yesterday. A week ago it was at US$1889/oz, so up +1.3% over that period.
And oil prices are up +$1.50 at just on US$80/bbl in the US. The international Brent price is now just on US$84.50/bbl, both levels very similar to a week ago.
The Kiwi dollar starts today unchanged at just on 59.2 USc, and down just -20 bps from a week ago. Against the Aussie we are also unchanged at 92.2 AUc. Against the euro we are marginally softer at 54.7 euro cents. That all means the TWI-5 is now at 68.4, unchanged from yesterday, and little-changed from a week ago.
The bitcoin price is little-changed today and now at US$26,018 and down by just -US$15 from yesterday. It is down by -1% from a week ago. Volatility over the past 24 hours has been low at just under +/- 1%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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