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Here's our summary of key events overnight that affect New Zealand, with news recession warnings are piling up.
This morning, Wall Street is flashing red lights. Equity markets are spooked by bond markets which say a US recession is coming. The S&P500 is down -2.8% meaning the drop in August so far is -4.5%. The closely-watched 3m-10yr US Treasury bond curve is now remarkably inverted at -37 bps. The 2-10 curve is flat and about to invert too and that will be its first in 12 years. These are serious signals. Late in the European sessions, after Wall Street had opened, they too fell sharply, ending up down more than -2%.
The triggers are weak data in both Germany and China. Both have been caused by capricious US tariff policy. This is a pure Trump recession.
US import prices rose in July from June even if they are lower year-on-year. It was an uptick that wasn't expected.
The recent US moves to "save Christmas" and the higher prices consumers will pay for the latest US tariffs, isn't bringing any similar concessions from China. If anything they are hardening their stance. As someone said, it's like Santa Claus stealing your bike and then giving back as a present.
China is not only dealing with the US trade war and unrest in Hong Kong, its economy is slowing faster now too. Industrial production data has posted its worst growth since 2002, up only +4.8 in the year to July. Analysts had expected this to rise +6.0% and down from +6.3% in June. That is a fast decline. And that wasn't the only sharply negative data; retail sales rose 'only' +7.6% in July from a year ago and way below the +8.6% expected and the June rise of +9.8%. At least the Chinese aren't gilding this data. But they are preventing the yuan from sliding too fast.
German GDP actually fell in the second quarter of 2019 from the first quarter, and shows zero growth from the same quarter a year ago.
EU GDP rose +1.1% in the second quarter of 2019, a slightly slower rate than in the first quarter and that's its slowest growth rate since 2014.
In the UK, speculation is growing that the new UK Prime Minister could suddenly declare Brexit now, taking the country out of Europe with an end-run around the Parliamentary process, and then call a general election.
The UST 10yr yield has slumped -9 bps to be at just on 1.58%. Their 2-10 curve is now completely flat, and their negative 1-5 curve is wider at -30 bps. The widely-watched 3mth-10yr curve has ballooned out to negative -37 bps. The US 30yr is about to go under 2% yield and an all-time record low. The Aussie Govt 10yr is at 0.93%, down -5 bps from yesterday. The China Govt 10yr is up +1 bp at 3.03% and just off its decade low, while the NZ Govt 10 yr is also up, even more, up +3 bps to 1.13% although that is likely to fall when local markets open here today.
Gold has jumped +US$13 today to US$1,514/oz.
US oil prices have dropped sharply today giving up yesterday's bump and more, and are now just on US$55/bbl and falling. The Brent benchmark is now at US$59.
The Kiwi dollar is weaker again today, at 64.3 USc. On the cross rates we are up to 95.3 AUc. Against the euro we are unchanged at 57.7 euro cents. That puts the TWI-5 at just on 69.7.
Bitcoin is down -10% overnight to US$10,206 and its lowest this month. 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 ».