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Here's our summary of key events overnight that affect New Zealand, with news both China and the US are delivering shaky economic data.
In China, August data for both industrial production and retail sales show growth slowing fast. The trade war won't be helping, but in the end as we have shown before, trade is only a small part of the Chinese economy. This slowing is more about its own structural problems and Beijing's policies toward them. They know they need to "reform and open up" but they aren't doing it fast enough to prevent a slowing of the whole economic engine.
The bad data has spurred another wave of hope for new stimulus policies from Beijing - which of course just delays the reform they need. So far, the government seems to be holding the line against any major efforts, but as one respected observer noted, it is going to become increasingly difficult politically to stay the course. A central bank interest rate cut is now expected soon.
Weakening data continues in the US as well. The latest regional Fed survey, this one from New York, shows the same trend. And in the US there is no suggestion of "reform" or "opening up". There the policies are revert-to-the-past, and isolationism.
All eyes are now on the US Fed and their Thursday rate review. Markets are betting on a modest -25 bps cut.
In Canada, existing home sales rose +5% in August from a year ago, but have been on a steady downward trend since May.
Global trade is slowing, as we have been reporting for months now. Till now essentially that has been a slowing of the goods trade. Now we are seeing signs the global services sector is slowing as well. And its a broad loss of momentum across many service sector categories.
The UST 10yr yield fell back on the shift to 'safety', down -6 bps and now at 1.84%. Their 2-10 curve slipped a little to +8 bps. Their negative 1-5 curve is is back out to -15 bps. Their 3m-10yr curve is much more negative at -26 bps. The Aussie Govt 10yr has settled back -4 bps to 1.19%. The China Govt 10yr is up +2 bps, now at 3.11%. The NZ Govt 10 yr is now at 1.36%, a gain of just +1 bp from yesterday.
Gold is higher today, up +US$13 to US$1,499/oz. But that is a very modest reaction to the oil tension news.
US oil prices jumped +US$8 on those tensions and are now just under US$63/bbl. That is a +15% jump and far less than the doubling that was part of earlier speculation. The Brent benchmark is now just under US$69.
The Kiwi dollar opens weaker again today, now down to 63.4 USc. On the cross rates we are softer too at 92.5 AUc. Against the euro we are holding at 57.7 euro cents. That puts the TWI-5 down to just on 68.8.
Bitcoin is now at US$10,155 and -1.8% lower than 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 ».