Here's our summary of key events overnight that affect New Zealand, with news world trade by airfreight is shrinking.
In the US, their trade deficit (including both goods and services) jumped in May reaching a massive -US$643 bln in the past year. That is 13% worse than the same period a year ago. Clearly the trade tensions between the United States and China mean the US is going backwards, plus their consumers are paying the cost of the tariffs. The US Administration has reacted by adding huge new tariffs, this time on Vietnamese products.
The closely watched ISM services PMI recorded its lowest reading since July 2017, adding to signs that economic growth slowed sharply in the second quarter in the US, possibly down to just +1.3% pa.
This weekend we get the June non-farm payrolls report and analysts are not expecting a strong result (current expectations are for +163,000 new jobs). Today the precursor ADP employment report suggested that even that may be too high coming in with a June number of only +102,000. SMEs are now shedding jobs.
Not helping will be the Trump Administration nominating two avowed rate-cutters as Fed board members.
In Vancouver, their housing sales volumes fell to a 19 year low in June. But agnets there are reporting renewed interest from Hong Kongers following the troubles there.
In China, their services sector is reporting its weakest expansion in four months. The only thing keeping things positive is Beijing's stimulus support, the survey says.
Updated data on May international airfreight shows it down -4% from the same month a year ago. The Asia/Pacific region is down almost -7% although that is less than the -11% decline they recorded in April.
In Australia, they have posted another record trade surplus on the back of strong iron ore prices and shipments. The May surplus for both goods and services was +AU$5.7 bln, smashing the previous record of +AU$4.8 bln set only a month prior. In the full year to May, the full Aussie trade surplus now exceeds +AU$43 bln, far above the +AU$6.6 bln in the equivalent prior year.
The Aussie Federal government is concerned about the regulator-induced clamp on bank lending, especially for mortgages, and is attempting to ease some of the new restrictions.
The UST 10yr yield is lower again, now at 1.95%, down -3 bps from the same time yesterday. Their 2-10 curve is now at +19 bps and their negative 1-5 curve is at -19 bps. The Aussie Govt 10yr is at 1.28% and down -5 bps overnight. The China Govt 10yr is down -4 bps to 3.19%, while the NZ Govt 10 yr is down -3 bps, now at 1.56%.
Gold is still rising on top of yesterday's strong recovery, up +US$13 overnight to US$1,418/oz.
US oil prices are little-changed today at just on US$57/bbl The Brent benchmark remain at US$63/bbl.
The Kiwi dollar is up against a weakening US dollar and now at 67.1 USc. On the cross rates we are softer at 95.3 AUc. Against the euro we are a little firmer at 59.5 euro cents. That puts the TWI-5 at 71.7 which is its highest since the end of April.
Bitcoin is firmer again today, up +2.4% from this time yesterday to US$11,084. The bitcoin rate 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 ».
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6 Comments
Dow, S&P 500, and Nasdaq close at record highs. https://www.marketwatch.com/story/sp-500-heads-for-3rd-straight-record-…
This is a worry
All the news is about slowing economies and even though moves from governments to lower OCRs will help debt servicing and investment, you have to wonder how much earnings are effected by these slow downs.
Its well publicized that there is a mountain of corp debt out there and zombie companies, whose business model relies on future growth.
At the end of the day it doesn't matter how low the interest rates are if you are not bringing in the earnings to service the debt and pay a return to your shareholders.
It is clear that these markets are speculative and sentiment based at the moment
I fear that once the earnings drop and debt defaults start coming we are in for a monumental shock
David, you do a great job of summarising the economic data that matters. The Aussies seem to be beating us 20-0 at the moment. How about adopting a more complete summary of how the Aussies and NZ are doing including a comparision of the net international investment position along with the goods and services data. That would give a very useful insight into what's going really on. A simple graphical treatment would really ground the discussion and enhance your status as the place to go to see what's going on economically. It might even help ground the political discussion.
I know the data is available, but it needs someone who understands it to clarify what it means and present the information clearly, both in text and graphics. Aussie Beating Us Hands Down also makes a good headline....
Clearly there must be a devious and clever plan that is beyond me. If Trump wants to hurt China he needs a high USD and to be extra nice to his friends. Tariffs on China's neighbours is just daft, but then the US is usually ham fisted when it comes to foreign policy. A sane policy would be to butter up Vietnam, Taiwan, South Korea and Japan, at least it seems that way to my simple way of thinking. So is it a Baldrick Cunning Plan or the Thucydides Trap that it appears to be.
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