Bonds, equities, currencies and commodity prices all in turmoil; China home loan rates drop; EU struggles; Moody's cuts mining outlook; UST 10yr 3.70%; gold and oil down sharply; NZ$1 = 57.4 USc; TWI-5 = 67.9

Here's our summary of key economic events overnight that affect New Zealand, with news financial markets are now in 'extreme fear' mode as they face increasing equity and bond losses. The US dollar is pushing even higher, and spreading financial problems out to emerging economies fiercely. The NZD has dived.

Tax cuts in the UK have crashed the British currency.

Commodity prices are wavering.

But amazingly, through all this turmoil that is compounding the pain from the Ukraine invasion, all EU countries and leaders remain united in facing up to the Russian threats and challenges - with the almost sole exception of Hungary. It seems they are united in taking the pain that will come with winter. Putin had been counting on a fracturing, but it isn't happening. Given the EU's penchant for disagreement and slights, it is an impressive demonstration of solidarity. But all this could also be threatened by the rise of fascist parties in Italy where there are elections this weekend.

First up, there were a couple of early PMIs out overnight. The American one reported that private sector output fell at softer pace as new orders returned to growth in September. Their factory sector expanded in September, but their services sector didn't even if the contraction was very minor.

Canada reported retail sales activity for July overnight and it wasn't positive with both month-on-month declines (their first in seven months) and year-on-year retreats.

In China, home loan interest rates have dropped to record-low levels in at least 80 major Chinese cities, as financial regulators endeavour to keep the property market afloat. In September, over 80% of 103 key cities surveyed show first home loan rates have fallen to 4.1%, while second home loan rates have fallen to 4.9%.

Singapore's annual inflation rose to 7.5% in August which was above the 7.2% expected by analysts, and above the 7.0% they had in July. Generally ASEAN inflation is something to keep an eye on, and the surging US dollar won't be helping. Malaysia's inflation is rising and is at 4.7%. Indonesia is also at 4.7%. Thailand is at 7.9%.

Taiwan's inflation rate is low (like China's) and currently running at 2.8%. But their retail sales activity expanded +12% from a year ago, and their industrial production is up at record levels.

The early Eurozone PMI for September reported a steeper downturn as price pressures intensified. Both their factory and service sectors are contracting this month, but the quantum is quite small at this stage. The negative impacts are strongest in Germany. The French activity is positive and helping to hold up the overall results.

Early Australian PMI indexes show their factory sector expanding at a good pace in September and faster than in August. But their services sector is not mirroring that, more or less marking time.

But much of Australia is exposed to mining, and commodity prices are retreating. Now credit rating firm Moody’s has changed its outlook for the global metals and mining Industry from stable to negative as a global economic slowdown continues to soften demand.

The UST 10yr yield starts today at 3.70% and unchanged from this time yesterday but at one point in between it got as high as 3.81%. But even at current levels it is still its highest since 2010. A week ago it was at 3.46% so it has risen +24 bps since. The UST 2-10 rate curve is more inverted at -41 bps. But their 1-5 curve is much less inverted at -17 bps. And their 30 day-10yr curve has flattened to +105 bps. The Australian ten year bond is higher, up +6 bps at 3.91%. The China Govt ten year bond is up +2 bps at 2.71%. And the New Zealand Govt ten year will start today at 4.16%, up +16 bps from this time yesterday.

At the end of trading yesterday local swap rates zoomed higher yet again.

In Wall Street's Friday trade the S&P500 fell another -2.0% as the re-rating continues for equities. That means it is down -4.4% for the week and -23% since the peak at the start of the year. The -1120 pts drop since that peak is its biggest fall in history, exceeding the -1077 pt drop at the start of the pandemic, and the -716 pt drop in the GFC. Overnight European markets all closed down another -2%. London is down -3.6% for the week, Frankfurt is down -3.2% for the week and Paris is down -4.4%. Yesterday Tokyo ended down -0.6% to be -2.6% lower for the week, Hong Kong closed down -1.2% and down -4.1% for the week, and Shanghai closed down -0.7% for a -1.1% weekly drop. The ASX200 was down -1.9% on Friday for a weekly retreat of -3.9%. The NZX50 wasn't immune ending down -0.7% for the day to retreat nearly -1.4% for the week. The NZX50 was the least-worst of all equity markets, a dubious distinction for investors.

The price of gold will open today at US$1642/oz. This is down -US$30 from this time yesterday.

And oil prices start today down a very sharp -US$4.50 USc from yesterday at just under US79/bbl in the US while the international Brent price is now just under US$84.50/bbl. These are eight month lows.

The Kiwi dollar will open today at just on 57.4 USc and more than -1 lower than this time yesterday. This is its lowest since briefly in the first few days of the first pandemic lockdown, and prior to that 13 years ago. Against the Australian dollar we are slightly firmer at just 88.1 AUc and still near its lowest in seven years. Against the euro we are little-changed at 59.3 euro cents. Against the yuan we are down to ¥4.1 and its lowest since2015 (except the pandemic) .That all means our TWI-5 starts today at 67.9, and down -50 bps in a day and also to seven year lows (also pandemic-excepted).

The bitcoin price is now at US$18,753 and down another -1.7% from this time yesterday. It has been under US$20,000 for six straight days now. A week ago it was at US$19,606. Volatility over the past 24 hours has been moderate at just on +/- 2.6%.

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