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Here's our summary of key events overnight that affect New Zealand, with news China's favoured multilateral trade deal is now at the sharp end of negotiations and things aren't looking too positive.
But first, the level of consumer debt in the US rose more than expected in July, up +US$23 bln to US$4.08 tln. A rise of +US$16 bln was expected and slightly more than the +US$14 bln in June (which was revised lower).
The Regional Comprehensive Economic Partnership (RCEP) ministers meeting is underway in Thailand and we are represented by Damien O'Connor. These negotiations are at a critical stage, almost ready to discover whether this version of multilateralism (China's answer to the TPP) has legs or not. The big sticking point is India. They are resisting getting rid of tariffs on Chinese goods for strategic reasons, and they feel they have a lot to lose against Australia and New Zealand in horticulture and dairy. India's commitment to FTA's like the RCEP is being questioned and they are being challenged to commit or leave the group. The most likely outcome is that they will walk away, reducing the number of countries involved to 15 and removing -11% of the combined GDP. At the meetings so far there has been little progress. RCEP talks are supposed to be completed by November.
Yesterday, equity markets came in with a lackluster performance and today Wall Street is heading the same way; little changed. European markets were generally lower although the German DAX did post a +0.3% gain. Shanghai also rose and by a larger +0.8%, but few other equity markets managed notable changes. The S&P500 is down -0.2% so far today.
In China, August car sales fell -10% from the same month a year ago. This is the 14th decline in the past 15 months.
In Australia, July home loan growth surged and it probably grew as fast in August. After being down an average of -14% on a year-on-year basis in each of the first six months of 2019, July came in just -3% lower than the same month a year ago. On a seasonally adjusted basis, that represents almost a +4% rise from June. First home buyers are being given the credit for the turnaround.
And staying in Australia, the headlines read "Westpac slashes mortgage rates to 50 year lows". Sounds interesting - until you realise Aussie home loans all come with fees. And when you match their "comparison rates" with equivalent New Zealand rates, you realise a two year fixed rate at Westpac New Zealand will be at 3.59% (with minimum 20% equity) whereas the equivalent one in Australia using their cheapest 'package' will cost you 3.95% - provided you have at least 30% equity.
The UST 10yr yield is up +6 bps and now at 1.62%. Their 2-10 curve marginally more positive, now, at +5 bps. Their negative 1-5 curve is narrower at -29 bps. Their 3m-10yr curve is also narrower at -44 bps. The Aussie Govt 10yr is up +1 bp at 1.08%. The China Govt 10yr is up +2 bps at 3.04%, while the NZ Govt 10 yr is down -2 bps, now at 1.16%.
Gold is lower again, down -US$3 to US$1,503.
US oil prices are up more than +US$1 today and now just over US$57.50/bbl. The Brent benchmark is also up at just on US$62.50. The new Saudi oil minister has just agreed to new OPEC output cuts.
The Kiwi dollar is firmer today, now up to 64.4 USc. On the cross rates we are back down to 93.7 AUc. Against the euro we are up at 58.2 euro cents. That has firmed the TWI-5 up to just on 69.6.
Bitcoin is now at US$10,254 and that is down -1.4% 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 ».