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Here's our summary of key events over the weekend that affect New Zealand, with news we are watching data weaken comprehensively in China.
The canary is the tin price. It fell more than -6% last week to settle at US$17,700/tonne. That is the largest drop since September 2011 and the reason for the drop is sharply reduced Chinese demand.
Next, Chinese banks sold a net NZ$28 bln of foreign exchange in June, the biggest one-month net sale in two years, as the trade war pressure builds. And yet another in a growing list of companies in the Middle Kingdom is having trouble meeting its debt obligations as they fall due.
China is now actively working to keep foreign companies from leaving the country, dangling special benefits so that the advantages of staying outweigh the heavy tariffs imposed by the Americans. More than 50 global companies have announced or are considering plans to move production out of China. And not just foreign companies. Chinese manufacturers are also part of the planned exodus.
And to reinforce the point, it turns out that Vietnam's port throughput now exceeds that for Hong Kong, a major China trade gateway. Vietnam is a major winner from the trade war.
In New York, the key Fed branch that watches over Wall Street has taken the very unusual step of 'clarifying' its governor's comments. From a speech on Friday, markets took it that John Williams, a voting Fed member, was signaling a -50 bps rate cut at the next meeting. But not so, a misinterpretation, now says the bank. Markets now expect a -25 bps cut instead.
In the closely-watched University of Michigan survey of consumer sentiment, it has come in only marginally firmer this month. But it did undershoot analyst expectations somewhat.
And the US is back in debt ceiling talks as the authorised limit will be reached in early September and right in the middle of a Congressional break. This time the Democrats hold more of the cards.
Canada retail sales for May were disappointing, continuing a weak trend. Although this the first time in four months they have declined, they are now up less than +1% year-on-year.
In Europe, data from France bucked the trend with industrial output up strongly in May, indicating the euro area’s second-largest economy is performing much better than most. It was up +4% year on year, one of the best outcomes in the euro bloc.
In Australia, just as banks start easing mortgage rules following back-tracks by their regulator, house sales show signs of a good pick-up. Auction clearance rates hit 64%, the highest in a year. And the signs are 'positive' for auction activity this weekend.
The UST 10yr yield is now at 2.06%. Their 2-10 curve is slightly flatter, now at +24 bps and their negative 1-5 curve is a little steeper at -13 bps. The Aussie Govt 10yr is at 1.36%, down -6 bps for the week. The China Govt 10yr is down -2 bps for the week to 3.17%, while the NZ Govt 10 yr is now at 1.60%, a -5 bps fall on the same basis.
Gold is up overnight to US$1,425/oz and a +US$9 gain for the week.
US oil prices are a little firmer today. They are now just over US$55.50/bbl. The Brent benchmark is also little changed at just over US$62.50. And while tensions in the Middle East do seem to be rising, it is somewhat of a surprise that oil prices aren't following.
The Kiwi dollar is stronger yet again to start the week and just touching 67.6 USc. On the cross rates we are also firmer at 96 AUc. Against the euro we are up at 60.3 euro cents. That pushes the TWI-5 up to just on 72.5.
Bitcoin has been unusually volatile over the past week but is now at US$10,479. For the week it is down more than -10% however. Volatility has been wild however at +/- 15%, generated because of official concerns over Facebook's Libra and much increased regulation and oversight. 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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