US retail sales pick up; but US factory production weakens; Canada house sales rise again, jobs too; equity markets on hold; central bank cuts mount; China house prices up; UST 10yr yield at 1.53%; oil down and gold up; NZ$1 = 64.5 USc; TWI-5 = 69.8

US retail sales pick up; but US factory production weakens; Canada house sales rise again, jobs too; equity markets on hold; central bank cuts mount; China house prices up; UST 10yr yield at 1.53%; oil down and gold up; NZ$1 = 64.5 USc; TWI-5 = 69.8

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Here's our summary of key events overnight that affect New Zealand, with news bond market signals aren't getting any better even if a set of data out today isn't so gloomy.

In the US, their advance retail sales report for July was good with them advancing +3.4% above the same month in 2018. This was similar to the prior month gain and given that American inflation is +1.8%, that represents a small but positive 'real' increase. (Petrol prices produced no distortions this month.)

But US industrial production data wasn't as positive, declining from June and up only +0.5% in the full year from July 2018. Only 'mining' (read oil production) kept it positive; factory production was -0.5% below the same month a year ago. Analysts are surprised by this drop.

Still, two regional factory surveys out overnight, one in the New York area, and one in the Pennsylvania area, both were quite positive, each with 'modest' gains.

In Canada, home sales there rose for the fifth month in a row, recovering +12% from a weak month the year before.

And there was a positive July payrolls report in Canada too from the unofficial ADP survey.

Overnight European markets held their lower levels and moved somewhat lower. The exception was London which dropped a further -1.1%. They followed Asia where end-of-session gains were recorded in Shanghai and Hong Kong, but Tokyo fell a rather sharp -1.2%. Wall Street has opened somewhat confused about where to go with little net change so far.

But US Treasury 30 year yields have fallen below 2% for the first time ever as bond markets continue their slide. US Treasury 10 year rates at 1.52% is also a three year low.

Around the world, the number of central banks responding to the growing gloom is now up to 30 of them cutting rates in 2019 and only one of these cutters has a rate lower than New Zealand's 1.00%, Sweden which has a negative -0.25% rate. All the others have much more rate-cutting ammunition left.

In China, they are actioning counter-measures on imports from the US in retaliation for the latest US 10% tariff, even after the US delayed theirs. Prospects for the US farm belt exports look particularly rough.

China home prices are rising at about a +7% annual rate but the steam seems to be still building for these gains. In June 63 of 70 large cities recorded an increase. In July that is up to 67 of 70.

The UST 10yr yield has fallen consistently overnight, down another -5 bps to be at just under 1.53%. Their 2-10 curve is at just +3 bps, and their negative 1-5 curve is wider at -31 bps. The widely-watched 3mth-10yr curve has ballooned out to negative -49 bps in a sharp shift. The US 30yr is about to go under 2% yield and an all-time record low. The Aussie Govt 10yr is at 0.88%, down another -5 bps from yesterday. The China Govt 10yr is unchanged at 3.03%, while the NZ Govt 10 yr is also down, today by -8 bps to 1.05%.

Gold is up another +US$9 today to US$1,523/oz.

US oil prices have dropped again today, down by more than -US$1, and are now just on US$54/bbl and falling. The Brent benchmark is now at US$58.

The Kiwi dollar is not a lot changed today but if anything it is firmer, at 64.5 USc. On the cross rates we are softish at 95.1 AUc. Against the euro we are up to 58 euro cents. That puts the TWI-5 little-changed at 69.8.

Bitcoin is also little-changed, down just -1.9% to US$10,008 and a new low for the 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 ».

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31 Comments

Comment Filter

Highlight new comments in the last hr(s).

Smoke and fire?
"GE shares tank more than 13% after Madoff whistleblower calls it a ‘bigger fraud than Enron’"
https://www.cnbc.com/2019/08/15/ge-shares-drop-after-madoff-whistleblowe...

This one looks like a beauty. " Traders who had bought the Merval like there was no tomorrow (and the big question is "from who?") were left strung out to dry, the Merval immediately dropped 10% at which point its standard circuit breaker clicked in, then on re-opening the stampede for the door saw the Merval drop 48% on the day, the world's second largest ever one day market drop anywhere in the last 50 years.
When rip-offs are this big and done this well, I am forced to sit back and applaud. The people behind the Elypsis and BTG Pactual polls have pulled off one of the biggest white collar crimes of all time, right in front of your noses and instead of it causing an international financial scandal, it takes a pissant blog in a dark corner of the interwebnetpipes to point it out to you all.
https://incakolanews.blogspot.com/2019/08/exclusive-how-argentinas-stock...

More like Smoke and mirrors. Greed, greed and more greed!

What a surprise. "The head of the French channel ports has dismissed warnings of Brexit chaos on the Dover-Calais trade route as irresponsible scare-mongering by political agitators.
"The British authorities have been doing a great deal to prepare. People say they are asleep but I can assure you that they are highly professional and they are ready," said Jean-Marc Puissesseau, president of Port Boulogne Calais.
"There are certain individuals in the UK who are whipping up this catastrophism for their own reasons. This has provoked a lot of concern but basically ‘c’est la bullsh**'.
https://www.telegraph.co.uk/business/2019/08/11/no-deal-lorry-mayhem-dov...

Daily Telegraph: cheer leader in chief for good old Boris.

Curiously, my two favourite UK papers are the Guardian and the Telegraph. Both actually still employ intelligent, experienced journalists with real insight, instead of churning out pap. It is better to have a clear exposition of a subject, explored from different points of view, than the chilling controlled propanda of the consensus media.

Most media acts as the unaware "useful idiot" of special interests and presents a carefully controlled narrow view of each issue, seeking to distract us from examining real issues in sufficient depth by dividing us against one another. It's all about controlling the narrative.

Absolutely scathing article about The Telegraph;

"The Telegraph's decline from respectable broadsheet to semi-deranged prime ministerial fanzine continues. "Boris Johnson has public's support to shut down parliament to get Brexit over line" its front page says today - a series of words which have almost no connection whatsoever to objective reality".

https://www.politics.co.uk/blogs/2019/08/13/psychological-warfare-over-n...

A balanced piece from Ian Dunt, host of the Remaniacs podcast, and keen milk shaker vs. a direct quote from a French port chief. I would go with the port chief in the objective reality stakes.

Hells Pizza is advertising Oamaru lamb pizza. Has anyone tested to see if there is any REAL meat involved?
Or is it more FAKE news?

You cares? If it tastes great just eat it!

Because although tongue in cheek, i was hoping to encourage comment on the modern definitions of - milk - meat - cheese - dairy etc.
For many of us its not just a taste test - its our and our family's livelihoods at stake.

If it's tongue in cheek I hope it's lamb tongue. Do like a good old lamb tongue sandwich.

If the fake article is produced in a debt based startup then I would not worry so much about your livelihood.

Tried a burger fuel no-chook chicken burger yesterday.. would buy again at half the price..maybe.

A Stock Buyback Ban Won’t Make Much Difference
Fixing other things that are wrong with corporate America is more important.

China industrial production (even on THEIR figs) down to 4.8%pa annual growth. And GDP meant to be 6.2% this year? Not likely. USA industrial production apart form oil, negative. Germany and UK have zero growth or negative. India and Pakistan on verge of war. Hong Kong about to feel the wrath of Xi and world about to get full message about cuddly China. Australian consumer choking on debt and hence tapped out, so their GDP sliding with their currency. But of course non of this will impact NZ.

Around the world, the number of central banks responding to the growing gloom is now up to 30 of them cutting rates in 2019 and only one of these cutters has a rate lower than New Zealand's 1.00%, Sweden which has a negative -0.25% rate. All the others have much more rate-cutting ammunition left.

Today the German #Sparkassen complained to the #ECB re zero interest & negative interest-policies.
In short: Damages banks & savers. Link

My book of the week

The curse of the Mogul, what's wrong with the worlds leading media companies.

https://www.amazon.com/Curse-Mogul-Worlds-Leading-Companies/dp/159184390...

Wow!.. interesting. I just purchased a book yesterday. This one:
https://www.bookdepository.com/Aftermath-James-Rickards/9780241304082?re...

Currently reading this one til it arrives: https://www.bookdepository.com/Death-Money-James-Rickards/9781591846703?...

God bless.

Thanks, have a fun day

Ditto ;o)

David - oil is not 'produced', it is extracted. That's a one-off, and it's in trouble

https://www.resilience.org/stories/2019-08-14/bleak-financial-outlook-fo...

"The messages coming from energy analysts, the financial industry, and the fracking industry all lead to the same conclusion: The U.S. shale industry has been a financial disaster for investors, with producers piling up huge amounts of debt despite extracting copious volumes of oil from disappearing sweet spots. Now, shale companies are under mounting pressure to pay back that debt by producing oil from lower tier acreage. If past performance is any indication, this approach is a major long shot".

It was a desperate attempt to continue real growth. It was always doomed.

It seems like US non-farm productivity is on a roll: economic output has been outgrowing total hours worked by a decent margin. These results are unsurprising given that US companies and institutions have always been the first choice for all those brilliant minds out there.

Also they were quick on the marijuana uptake, Colorado's economy is doing well.

https://www.smh.com.au/national/nsw/2013-draft-report-warned-that-nsw-to...

But there's nothing so lonesome, so morbid or drear
Than to stand in a bar, of a pub with no beer

That is a very serious problem.

... save the world's precious water reserves ... drink beer instead .... or an XXXX if you're an Aussie reading this. ..

Cheers !

I had a nightmare last night that the NZD/USD exchange rate was at 0.29 and woke up in a cold sweat