US can't break trend growth; US debt ceiling talks progress well; Canada wholesale trade dips; China has eyes on home loans; Hayne piles pressure on APRA; UST 10yr yield at 2.05%; oil & gold up; NZ$1 = 67.7 USc; TWI-5 = 72.6

US can't break trend growth; US debt ceiling talks progress well; Canada wholesale trade dips; China has eyes on home loans; Hayne piles pressure on APRA; UST 10yr yield at 2.05%; oil & gold up; NZ$1 = 67.7 USc; TWI-5 = 72.6

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Here's our summary of key events overnight that affect New Zealand, with news equity markets are struggling to find positives to match their high levels.

But first in the US, the latest update to the National Activity Index produced by the Chicago Fed shows this assessment of economic activity running at its historical trend rate, which is +2.5% pa. Thirty-six of their indicators improved from May to June, while 49 of them deteriorated.

And in Congress, debt ceiling negotiations seem to be progressing civily and a deal seems to be close. But it does involve an increase of +US$320 bln or +1.6% taking it to US$20.8 tln or almost 100% of current US GDP.

Canada's wholesale sales dropped unexpectedly in May, down -1.2% year-on-year and also an even larger shift lower from April.

In China, regulators are targeting commercial banks' home mortgage loan business, part of efforts to ramp up scrutiny on the real estate sector's financing to prevent overheating risks. 

And China has launched a NASDAQ-style tech stock exchange. On its first day the price of all its 25 initial listings all rose, but the heavy hand of Beijing's controlling influence weighed on them all. On the main Shanghai exchange, prices were down a sharp -1.3% yesterday, taking the overall July decline to an eye-watering -5.2%. In Hong Kong, for all its troubles, their decline is only -1.7% for July so far. And the July drop in Japan is even less.

Wall Street is up +0.5% so far today from yesterday. The equivalent July performance there is a rise of +0.7%, so most of that has come in today's trading. Overnight European markets rose a modest +0.2%. Yesterday, the NZX50 was a bit of a star, up +0.7% and it is starring on the month-to-date basis as well, up +3.4%.

In Australia, the market numbers aren't so good, which is perhaps a little surprising given their great trade performance. But domestic issues keep undermining markets, the lastest being the unusual statements by banking commissioner Hayne, piling pressure on the regulator APRA by confirming he thought they had done - and are doing - a pretty poor job.

The UST 10yr yield has eased back to 2.05%. Their 2-10 curve is little-changed at +23 bps and their negative 1-5 curve is a little steeper at -15 bps. The Aussie Govt 10yr is at 1.32%, down -4 bps since yesterday. The China Govt 10yr is down -1 bps to 3.16%, while the NZ Govt 10 yr is unchanged at 1.60%.

Gold is up +US$2 overnight to US$1,427/oz.

US oil prices are a little firmer today. They are now just under US$56.50/bbl. The Brent benchmark is also firmer at just under US$63.50.

The Kiwi dollar is marginally stronger today and just touching 67.7 USc. On the cross rates we are also firmer at 96.2 AUc. Against the euro we are up at 60.4 euro cents. That pushes the TWI-5 up to just on 72.6.

Bitcoin has been unusually quiet overnight and now at US$10,344. Volatility has been just +/- 2.5%. 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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USD 
NZD
End of day UTC
Source: CoinDesk

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Public sector propping up employment and the economy, analysts say
I feel the same could be true in NZ's case. My mate runs a mid-sized recruitment operations in our major urban areas and says a lot of the labour market slack is being picked up by councils and public offices.

Also, the reason we are performing better than Australia in terms of wage growth can be pinned on the same employment trend, that is, the higher wage premium public sector pays over private in NZ.

So basically America is insolvent but continues to trade. How long can it continue ? worse still to come with my prediction that Trump is going to get a second term.