Here's our summary of key events overnight that affect New Zealand, with news lower growth is coming for China - and everyone else.
But first, on Saturday (NZT), we get the next US non-farm payrolls report. Analyst surveys suggest that will deliver +180,000 new jobs in May, well down from the +263,000 recorded for April. But today, the precursor ADP report suggests analysts may be over-estimating. This ADP report came in at just +27,000 new jobs, its lowest since 2010. This alternative survey shows that SMEs and manufacturers are doing it tough and shedding jobs in a significant way. The ADP reports are very close mimic of the non-farm data, but occasionally deliver a quite different result.
Meanwhile there were two American services MPIs out overnight. One - the internationally benchmarked one - shows a sharp decline to a three year low. The other - the more closely watched local one - recorded a faster expansion. Take your pick.
The US Fed released its May Beige Book survey results this morning. They say economic activity expanded at a modest pace overall from April through mid-May, a slight improvement over the previous period. Almost all reporting Districts reported some growth, and a few saw moderate gains in activity. Manufacturing reports were generally positive, but there were some signs of slowing activity and a more uncertain outlook, they said.
And the Fed is now on record of 'acting' to weigh against the impacts of a trade-induced slowdown. The Powell put.
There was a global survey out for the services sector as well and that reports a slowing, with a contraction in the order backlogs of service companies.
In China, their Caixin services PMI slipped to a three month low but it is still expanding at a good rate. However overall business confidence is also slipping.
The World Bank has cut their forecast for China growth to +6.1% in the 2020 year (pg 9). This is down from their prior +6.2% estimate. Lower business confidence, higher debt, and decelerating investment commitments are all behind their lower overall global view, all in turn all driven by the trade wars. (They don't review either Australia or New Zealand separately.) The IMF has made a similar cut for China growth.
In China itself, they have suspended enforcing their smog controls and steelmakers are going for it. Output is up almost +20% and that is keeping iron ore prices very high. All this production is in sharp contrast to their contracting factory PMIs. It is not clear how this reconciles.
None of this is affecting the equity market mood today. After big bounce-back gains yesterday, they are rising again today at about a +0.6% clip.
In Australia, Q1 2019 data out yesterday shows their economy grew at it slowest rate since 2009, up +1.7% from the same quarter last year, a drag on the annual rate of +2.4% in the year to March. This is way lower than its long term average of +3.5% pa.
The UST 10yr yield is little-changed overnight and is now at 2.12%. And their rate curves are easing with the 2-10 curve now at +28 bps and their negative 1-5 curve down to -19 bps. The Aussie Govt 10yr is at 1.49% and down -3 bps overnight. The China Govt 10yr is down -1 bp to 3.25%, while the NZ Govt 10 yr is unchanged at 1.72%.
Gold is up again but only by +US$3, now at US$1,329/oz.
US oil prices fell sharply again overnight, down more than -US$1 to just on US$52/bbl. The Brent benchmark is now on US$61/bbl. Inventories are building and demand is wavering. This market has now turned bearish with prices falling more than -20%in just eight weeks.
The Kiwi dollar is holding up well today. It is now at 66.2 USc. On the cross rates we are higher however at 95 AUc. Against the euro we are firmer at 58.9 euro cents. The TWI-5 is now at 71 and a new one month high.
Bitcoin has bounced back a little today, now up to US$7,803 and a +1.5% gain overnight. Bitcoin is charted in the exchange rate set below.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».