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Here's our summary of key events overnight that affect New Zealand, with news we are near the end of the American summer holiday season and markets will return in earnest next week after their Labor Day holiday.
But markets are open and are still absorbing economic news. Firstly in the US, we got official confirmation that higher tariffs are to be imposed on October 1. It is no longer just a tweet threat. Business groups say that this is coming at "the worst possible time". And consumers are now saying the American "economy is getting worse". And there was a sharp drop in mortgage applications last week.
And China is still ignoring the US calls for renewed trade war talks. No-one is confirming the "calls from China" actually took place.
But Wall Street is up strongly today, with the S&P500 up +0.7% so far in afternoon trade, even if it is light trading. Equity investors seem to be ignoring any warning signs today. But it is healthcare and big pharma stocks that are driving today's rise.
However, recession fears are building in the bond markets. The US Treasury 30 year bond hit just 1.90% a few hours ago and that is an all-time low amid unrelenting demand for low-risk government debt. US Treasury 30 year yields are now below 3 month Treasury bill rates for the first time since 2007.
In China, their households are getting deeper into debt. It was just a few years ago when Chinese household savings seemed unusually high. Things have turned substantially and households now have 55.3% of GDP as debt liabilities. That is up from 51.4% a year ago. The explosion of consumer lending is behind the sharp reversal. Official data showed that in June, consumer loans increased +21% from the same time last year, while the expansion of national retail sales slowed to a 15-year-low of +9.4%. But much worse are their corporates who hold 155% of GDP in debt exposure and while that is not getting worse, it remains a huge load and a critical vulnerability.
In the UK, their new prime minister is threatening to dissolve their parliament early to prevent any democratic stumbling blocks to his goal of a hard Brexit. The British currency fell on the news.
In Australia, the latest data for construction completed have been described as 'ugly' as they fell more than expected and suggesting economic slowdown fears are materialising.
The UST 10yr yield is down -2 bps at 1.47%. The widening of the inversions continue. Their 2-10 curve is now negative by -4 bps. Their 1-5 curve is at -38 bps. Their 3m-10yr curve is at -61 bps. The Aussie Govt 10yr is at 0.89%, down overnight by -1 bp. The China Govt 10yr is also down by -1 bp at 3.07%, while the NZ Govt 10 yr is unchanged at 1.11%.
Gold is unchanged at US$1,542/oz.
US oil prices are up about +US$1 again and now just under US$55.50/bbl. The Brent benchmark is also up to US$60.50.
The Kiwi dollar is softer again, now down to 63.4 USc. On the cross rates we have slipped to just under 94 AUc. Against the euro we are also softer at 57.2 euro cents. That pushes the TWI-5 down to 68.7 and still its lowest since September 2015.
Bitcoin is now at US$10,130 and virtually unchanged from 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 ».
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