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Here's our summary of key events over the weekend that affect New Zealand, with news most of the economic signals aren't very positive even if there are some notable exceptions.
First however, we should note that new higher tariffs came into effect today in both the US and China on each other's goods. Beijing used to be rattled by US trade 'punishments' but now they seem to be taking it all in their stride.
But tariffs aren't helping either country.
China reported that its factory sector contracted in August according to its official survey. It is not a large contraction but it is one they would rather not have. More promising for them, their service sector expanded at a slightly faster pace in August (53.8) - and faster that its US rival's service sector is expanding (50.9). So yes, China is feeling an effect, but is far from hampered.
In the US, the Fed's favoured inflation measure, the PCE, came in unchanged at the expected rate of +1.6% pa in July. But household income gains were weaker than expected, so the good consumer consumption data we got earlier in the GDP result seems unlikely to be sustainable.
The Chicago Fed's regional factory survey shows small declines in factory activity across the region. And it is far from the only region reporting declines even if it is one of the largest. US truck makers are seeing sharply lower orders and are cutting production heavily. The reason? their customers are going out of business.
And American consumers, according to one widely watched survey, are losing some of their optimism. This survey fell by the most since 2012.
The OECD is reporting that G20 international merchandise trade continued its downward trend in the second quarter of 2019, with exports contracting by -1.9% and imports by -0.9%. Exports contracted by -5.3% in China (to their lowest level since Q4 2017) and by -1.1% in the United States (their lowest level since Q1 2018). Imports rose marginally in both countries, (by +0.6% in China and +0.3% in the United States), on the back of stockpiling in anticipation of US tariff measures.
It is not all negative. Canada reported very strong economic growth the second quarter of 2019, up +3.7%pa on the back of fast-rising exports.
But in India, their economic growth has now slipped sharply to under +5% and a six year low as doubts grow about prime minister Modi's stewardship. Growth at this level is probably too low to keep lifting large numbers of people out of poverty.
Argentina is back on the IMF's rescue agenda after reeling from voter rejection of President Macri. S&P has just cut their country rating to CCC- prompting investor flight. There is now more than US$100 bln in debt that needs resolution.
In Australia, their housing market is back with higher demand. Residential property sales in Sydney and Melbourne have risen to near boom-time peaks as buyers respond to record-low interest rates. Auction clearance rates have jumped to over 80% and multiple bidders are common. Prices rose +1% in just the past month. Concerns about a sluggish economy aren't holding these markets back.
The UST 10yr yield is unchanged from this time yesterday at 1.50% and -3 bps below where it was this time last week. Their 2-10 curve still negative, but only by -1 bp. Their negative 1-5 curve is wide at -38 bps. Their 3m-10yr curve is out to a negative -59 bps and down to where it last was prior to the GFC. The Aussie Govt 10yr is at 0.88%, down -2 bps over the weekend. The China Govt 10yr is unchanged at 3.07%, while the NZ Govt 10 yr is now at 1.10%, and also unchanged from Saturday but down -6 bps over the past week.
Gold is lower at US$1,520, down -US$5 from Saturday. July gold demand weakened substantially in India.
US oil prices are noticeably weaker today at now just on US$55/bbl and back to where they were a week ago. The Brent benchmark is also lower at just on US$59.
The Kiwi dollar holding at its lower level and will start the week at 63.1 USc. That is almost -3c lower that were we were at the start of August. On the cross rates we are down at 93.7 AUc and that dropped more than -1c in the past week. Against the euro we are at 57.4 euro cents and unchanged in the week. That sets the TWI-5 back to just on 68.6 and that takes the overall devaluation of the Kiwi dollar since the beginning of August to -3.8%, and against the US dollar it is -4.3%.
Bitcoin is now at US$9,608 and a small rise from this time on Saturday but a -7% drop in a week. 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 ».