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Here's our summary of key events overnight that affect New Zealand, with news key aspects of the US economy seem mired in weakness.
The latest factory PMI's for the US show their expansion has ended, with this index level dipping to a stagnant 50 between expansion and contraction. That is a ten year low. Their service sector is still showing a modest expansion however.
New home sales in June came in +4.5% above the level for the same month a year ago, better than the year-to-date rise of only +2.2%.
In China so far this year (to the end of June), almost 300 property developers have declared bankruptcy as tighter regulation bites. Tighter financing rules aimed at preventing excessive investment is squeezing cashflows. Development in the wrong places is also an issue.
Not everything in China is suffering. Beijing has reported its cleanest air quality in 35 years of record-keeping.
In Hong Kong, the Chinese military has said that it can be deployed to Hong Kong to maintain social order "at the request of the city’s government".
Japan's July PMIs are similar to the US, but their services PMIs are expanding stronger.
In Europe, their July PMIs show the contraction in their manufacturing sector is deepening.
But despite all this core weakness, equity markets are generally near their all-time highs. The S&P500 is up +0.3% today even though some iconic listings are delivering weaker than expected profit results. European markets are up a similar amount. Yesterday, Shanghai was up +0.8% and the ASX200 was up a similar amount. The disconnect with the real economies in all places is hard to fathom. Long term low interest rates have generated a desperate hunger for any yield, juicing multiples to the stratosphere. The resulting imbalances are stark.
In Australia, both their factory and services PMI's are still expanding even if the rate is slowing. The New Zealand equivalents all look much better than these other benchmarks.
And the new APRA rules on banker compensation are already being declared a failure, even before they start. Industry insiders say they are likely to incentivise even higher pay for incumbents.
The UST 10yr yield is marginally lower at 2.05%. Their 2-10 curve is unchanged at +24 bps and their negative 1-5 curve is still at -16 bps. The Aussie Govt 10yr is down -4 bps at 1.28%. The China Govt 10yr is also up +2 bps to 3.18%, while the NZ Govt 10 yr is up +1 bp at 1.59%.
Gold is up +US$2 overnight to US$1,421/oz.
US oil prices are soft today, down more than -US$1. They are now just over US$55.50/bbl. The Brent benchmark is also softer at just over US$62.50.
The Kiwi dollar is unchanged today and still at 67.1 USc. On the cross rates we are much firmer at 96.2 AUc which is a +½c gain and a four month high. Against the euro we are up slightly to 60.2 euro cents. That firms the TWI-5 to just on 72.2.
Bitcoin has been much softer overnight and now down to just US$9,656 and a -4.5% drop since this time yesterday. Volatility has been +/- 3.3%. 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 ».