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Here's our summary of key events overnight that affect New Zealand, with news the IMF has again downgraded world growth prospects.
But first, the latest regional Fed survey in the US, this time from the mid Atlantic states, shows manufacturing activity weakened in July. Their index fell from 2 in June to -12 in July, its lowest reading since January 2013, as all three components - shipments, new orders, and employment - posted declines. Backlogs of orders also fell, reaching a value of -26, its lowest reading since April 2009.
US home sales fell in June, down -1.7% when a flat result was expected. A persistent shortage of properties pushed prices to a record high however with the median home price up to NZ$425,800 or +4.3% year-on-year. Their housing market is struggling to regain speed since hitting a soft patch last year. Meanwhile, the average commitment rate for a 30-year, conventional, fixed-rate mortgage decreased to 3.80% in June, down from 4.07% in May. The average commitment rate across all of 2018 was 4.54%.
Meanwhile, the White House and Congress have completed their two year debt-ceiling deal. It's a rare consensus compromise and a deal that helped firm the US currency.
In China, yesterday we reported that their NASDAQ-style tech share index had launched on Monday, with Beijing's SOE-buying support. But yesterday that support wasn't extended, and first-day buyers lost more than -US$1 bln as prices retraced sharply. It seems it was a one-day wonder.
And yesterday two more private Chinese firms joined the growing ranks of bond defaulters.
Meanwhile, China is importing beef and pork at a fast-rising pace, replacing lost local production from the ASF epidemic in the pig herd. Imports of beef surged more than +60% so far this year to 133,700 tonnes. Overseas pork purchases in June rose even more from a year earlier to 160,500 tonnes.
In Britain, Boris Johnson won the race to lead the ruling Conservative Party and become the country's next prime minister, repeating a pledge to pull Britain out of the EU by October 31 - but the challenge he faces became quickly apparent as he quickly lost the support of some key Cabinet members.
The IMF has reduced its 2019 and 2020 growth forecasts yet again, saying that the downgraded outlook is self-inflicted by trade-war policies. While this latest downgrade is a modest -0.1% in each of the two years reviewed, it comes on top of prior substantial downgrades. The longer the trade standoffs continue, the sharper these will become. No doubt a hard Brexit will be accounted for in the next review.
And by the way, the record high stock market price for A2 Milk is probably because of what was reported in this article that ran on interest.co.nz.
Wall Street is up +0.6% so far today, following European markets which were up +1.2% overnight. Shanghai was up +0.5% yesterday, Hong Kong up +0.3% and Tokyo up +1.0% yesterday.
The UST 10yr yield has moved up to 2.07%. Their 2-10 curve is little-changed at +24 bps and their negative 1-5 curve is still at -15 bps. The Aussie Govt 10yr is unchanged at 1.32%. The China Govt 10yr is also unchanged at 3.16%, while the NZ Govt 10 yr is down -2 bps at 1.58%.
Gold is down -US$8 overnight to US$1,419/oz.
US oil prices are a little firmer again today. They are now just over US$56.50/bbl. The Brent benchmark is also firmer at just over US$63.50.
The Kiwi dollar is marginally softer today and just touching 67.1 USc which is down more than -½c since this time yesterday. On the cross rates we are also softer at 95.7 AUc. Against the euro we dipped to 60.1 euro cents. That lowers the TWI-5 to just on 72.1.
Bitcoin has been soft overnight as well, at one point dipping below US$9,900, but now is at US$10,020 and a -3.1% fall. Volatility has been +/- 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 ».