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Here's our summary of key events overnight that affect New Zealand, with news of an unusual market intervention by the US Fed to stem a sharp yield rise.
But first up today, we had another dairy auction and this one delivered a positive result. In USD, overall prices rose +2.0% and in New Zealand dollars they were up +1.6% from the prior auction. The gains were broad based across most products with butter (+3.7%) and SMP (+3.4%) rises the most. Volumes sold were a respectable 37,345 tonnes. While the gains in NZ dollars wasn't special given our lower currency, it did represent the fifth auction in a row of such improvements and that has accumulated to +6.5% since July and takes prices back to levels we last saw in May. Of special note, the NZ dollar prices for SMP is now just over $4000/tonne and its highest in five years. WMP prices are now just under NZ$5000/tonne and their highest in slightly longer.
In the US, the Federal Reserve had to step into financial markets yesterday to keep market pressure from pushing their benchmark interest rate from rising above its target of 2.25%, the first time they have had to carry out this type of “market operation” since the global financial crisis. And it wasn't minor; they had to buy US$53 bln of securities to damp down the rising yield. Some see a structural flaw at work here.
American industrial output increased solidly in August from July, but that only puts it up +0.4% in a year. It was boosted by rising oil patch output, but factory output declined -0.4% year-on-year. The outlook for factories remains weak amid rising headwinds from trade tensions and slowing global economies.
Canadian manufacturing sales fell even more in the July data they have just released.
In China, they are preparing to release reserves of pork ahead of a national holiday to ease some of the food price pressure there.
China's home-price growth eased for a third consecutive month in August, with new home prices growing at their slowest pace in nearly a year.
And the Chinese central bank surprised markets by keeping its benchmark interest rate unchanged at 3.30% and effectively withdrawing liquidity. Shanghai equity markets fell -1.7% on the news.
In Germany, investor sentiment recovered all of its August decline in September in an unexpected improvement. But overall sentiment is still negative.
The UST 10yr yield is lower, down -3 bps and now at 1.81%. Their 2-10 curve slipped a little to +7 bps. Their negative 1-5 curve is is back out to -21 bps. Their 3m-10yr curve is more negative at -28 bps. The Aussie Govt 10yr has settled back -5 bps to 1.14%. The China Govt 10yr is up +1 bp, now at 3.12%. The NZ Govt 10 yr is now at 1.30%, a fall of -6 bps from yesterday.
Gold is marginally higher again today, up +US$3 to US$1,502/oz.
US oil prices fallen back -US$4 and giving up half of yesterday's gain to be now just over US$59/bbl. The Brent benchmark is now just over US$64. Saudi Arabia says oil production will now be "fully restored" by the end of September.
The Kiwi dollar is little-changed, up marginally to 63.5 USc. On the cross rates we are firmer too at 92.6 AUc. Against the euro we are down to 57.4 euro cents. That puts the TWI-5 at just on 68.7.
Bitcoin is now at US$10,264 and little-changed since 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 ».
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