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Here's our summary of key events overnight that affect New Zealand, with news of a temporary tariff-related sugar-rush.
First up today, the US Administration says it will delay the imposition of the latest extra 10% tariffs until the end of the year. The move is to allow US retailers to stock up for the end-of-year holiday selling season and prevent sticker-shock going into a key re-election period.
Even though the unilateral US move won't fix any trade or currency issue, the market relief is palpable. The S&P500 has regained all it lost yesterday, up +1.8% so far. The oil price jumped too.
American consumer inflation rose at the rate of +1.8% in July, it's average rise in the past year. Core inflation is up +2.2% (excluding food and fuel) driven by rent and medical care both of which are up more than +3.3%.
And American household debt rose +1.4% to US$13.9 tln in the second quarter of 2019, or to just over 65% of GDP. It has risen in every quarter for the past five years and the total is now US$1.2 trillion higher than the GFC peak. This data does show that overall deliquency levels are now back to levels they had just prior to the GFC, but the portion that is 'serious' is now at its highest share ever (even if it isn't anything like a stability risk). Just for perspective however, New Zealand household debt is on a completely different scale, running at 96% of our GDP.
In the US, two of the major car manufacturers are reported to be planning for an economic downturn.
In Hong Kong, their airport has been closed for a second day after it has became the centre of protest. The Hong Kong share market fell heavily yesterday, down more than -2%. And there seems to be no end to the trouble, with dissatisfaction spreading among Hong Kong residents at China's increasingly heavy influence.
In China, they released data that appears to show that foreign direct investment in the country is rising at a faster rate, up +8.7% from the same period a year ago. A lot of that was via new free-trade zones.
In Japan, machine tool orders are still in the doldrums, down -33% in July from the same month a year ago. Still, that was a smaller drop that they reported in June.
In Germany, their influential ZEW business sentiment survey has come in much more negative than was expected.
In Australia, their latest NAB business confidence survey isn't as bad but it isn't great either. They are seeing below average confidence and conditions with the business sector losing 'significant' momentum since early 2018 and forward looking indicators don’t point to an improvement in the near term.
The UST 10yr yield has firmed by +1 bp to be at just over 1.67%. Their 2-10 curve is now almost completely flat, now at just +2 bps and their negative 1-5 curve is much wider at -29 bps. Bond investors aren't buying into the latest tariff change optimism. The Aussie Govt 10yr is at 0.98%, up +3 bps from yesterday. The China Govt 10yr is down -3 bps at 3.02% and its lowest in ten years, while the NZ Govt 10 yr is down -2 bps to 1.10%.
Gold is -US$4 lower today at US$1,501/oz.
US oil prices are up strongly today by more than +US$2 to be over US$57/bbl. The Brent benchmark are now above US$61.
The Kiwi dollar is marginally weaker today, at 64.5 USc. On the cross rates we are -½c weaker at 95 AUc. Against the euro we are actually firmer at 57.7 euro cents. That puts the TWI-5 at just on 69.8.
Bitcoin is now at US$11,349 and that is almost exactly unchanged since this time yesterday. 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 ».