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Here's our summary of key events overnight that affect New Zealand, with news official interest rates are about to be cut in the key jurisdictions that affect New Zealand.
In advance, wholesale interest rates are falling. Local swap rates pushed on down to new record lows yesterday with the 1-5 curve flat and the 2-10 curve at a three year low of +40 bps. Benchmark Government bond yields also hit record lows. And both measures also hit record lows in Australia yesterday too. Driving rates down are market expectations of what the two central banks will do next week; the RBA is expected to cut on Tuesday, the RBNZ on Wednesday. And few analysts think this will be the last cut. Given both the New Zealand and Australian economies are in a relatively healthy state, it is unclear why these monetary authorities are choosing to fire their limited ammunition now.
But they are not the only ones. The US Federal Reserve seems to be on the same path. On Thursday this week (NZT) they are also likely to cut their benchmark policy rate by -25 bps, ending a policy of rate normalisation.
Meanwhile, the Dallas Fed regional survey showed that their general business conditions index was less negative in July than June.
Tame economic conditions are seeing trucking freight rates in the US falling quickly, due to the combination of flat demand and rising capacity.
Even in the Time of Trump, the US Fed is hosting a conference on how it needs to prepare for climate change. It says that "volatility induced by climate change" and efforts to prevent climate change are "increasingly relevant" for the Fed. It is trying to navigate between an unstable President and the impacts of a fast-changing climate. From any view, these moves are courageous.
In Hong Kong, just as Beijing throws it support behind "more forceful policy action", the city's public servants look likely to have their own demonstration protesting Beijing's incursions into the city's administrative life.
In Britain, their new no-compromise government is demanding renegotiation of Brexit. But the EU is saying negotiations have been had, and are completed. And Brussels is pointing out that the UK won't have access to EU financial markets in a hard Brexit. The UK currency fell on the news.
In Australia, new home sales for the three months to June rose, even if the rise was small. It was the first quarterly improvement in a year and a half, an early sign the market for new homes may be stabilising.
The UST 10yr yield is now at 2.05% and a -2 bps slip since this time yesterday. Their 2-10 curve is now at +21 bps and their negative 1-5 curve is at -15 bps. The Aussie Govt 10yr is at 1.21%, down another -2 bps since yesterday. The China Govt 10yr is up +3 bps to 3.21%, while the NZ Govt 10 yr is now at 1.51%, a further -3 bps fall on the same basis.
Gold is now at US$1,422/oz which is a +US$4 rise overnight.
US oil prices are marginally firmer today. They are now just over US$56.50/bbl. The Brent benchmark is also firm at just over US$63.50.
The Kiwi dollar starts today a little softer again, now at 66.3 USc. On the cross rates we are still firm at just on 96 AUc. Against the euro we are little-changed at 59.5 euro cents. That leaves the TWI-5 still at 71.6.
Bitcoin is also little-changed today at US$9,516 although volatility in-between has been +/- 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 ».
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