Wall Street mood improves; China house price growth slips; key China rate on hold; Japanese exports fall; sharp wealth changes; UST 10yr yield at 1.80%; oil and gold lower; NZ$1 = 64 USc; TWI-5 = 68.9

Wall Street mood improves; China house price growth slips; key China rate on hold; Japanese exports fall; sharp wealth changes; UST 10yr yield at 1.80%; oil and gold lower; NZ$1 = 64 USc; TWI-5 = 68.9

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Here's our summary of key events overnight that affect New Zealand, with news markets and traders are feeling more positive today.

On Wall Street we can see the return of a risk vibe in equity markets with the S&P500 up +0.6% so far in a positive start to the week. Signals that the US and China may actually complete their min-trade deal, and a market belief that Brexit will end up ok is driving sentiment. But these are only guesses at this stage.

Bond prices fell, yields rose on the same vibe.

In China, house price growth fell again in September according to official data out today. There are reports of heavy discounting by developers and those effects won't come through in the official data for a while yet.

And their central bank surprised the market by keeping the new benchmark rate for banks' lending unchanged at 4.2% in October, defying expectations of a cut, despite the latest data showed the economic growth slowed to its slowest pace in 30 years.

Japanese merchandise exports fell more than -5% in September, a bit more than expected but less that the -8% they fell in August. It's only a little thing, but the outlier here is New Zealand. Japan's exports to us were up +19% and imports from us down -14%. That put the trade between us in September into balance. For the half year to September, New Zealand ran a sizable merchandise trade surplus with Japan.

The annual Credit Suisse Global Wealth Report for 2019 has some surprising entries. New Zealand is identified as one of the top gainers in overall wealth per capita, coming in at #5 ahead of Singapore, but behind the usual suspects of Switzerland, the USA, Japan and the Netherlands. The other surprise is the dramatic fall in this list for Australia which recorded the largest fall of any country (see page 7). (More data here.) Another factoid from this report shows that the number of millionaires in New Zealand (in US dollars) rose from 155,000 in 2018 to 185,000 in 2019, a +20% gain. In Australia, the number fell by -108,000 or by -8%.

In Australia, there is growing talk the Fletcher Building is now a takeover target.

The UST 10yr yield is up sharply again today, up +5 bps to 1.80%. Their 2-10 curve is positive at +19 bps. Their negative 1-5 curve is back positive at +2 bps. Their 3m-10yr curve has is also now positive at 3 bps. The Aussie Govt 10yr is up at 1.17%, an rise of +4 bps. The China Govt 10yr is now at 3.23%, a +3 bps rise. The NZ Govt 10 yr is now at 1.28%, up +4 bps since this time yesterday.

Gold is down -US$5 overnight to US$1,485/oz.

US oil prices are soft today, now just under US$53.50/bbl. The Brent benchmark is just under US$59.

The Kiwi dollar is firm against the greenback today, now at 64 USc and a full +1c gain in the past four trading sessions. On the cross rates we are firm at 93.2 AUc. Against the euro we are at 57.4 euro cents. That puts the TWI-5 up at 68.9.

Bitcoin is now at US$8,181 and a rise of +1.4% overnight. 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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We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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Seems to me like Brexit is still looking a mess

https://www.bbc.com/news/uk-politics-50128740

The 31st is the date set and he is hell bent on delivering.

@theglc Britain will be fine , there are 60 odd million people who will survive a no -deal Brexit , the sun will rise on 1 November , there will be sufficient food to eat , fuel for the car , the light switch will still work ................

Britons voted in massive numbers ( 70 plus % turnout ) and they voted to leave.......... and no longer be dictated to by un-elected officials in Brussels, pompous Frenchman and dogmatic Germans .

BJ just needs to do what the electorate told the Government to do .............LEAVE

I guess you haven’t read operation yellowhammer then, also remain has had a majority for some time now, demographic die off and all that. The unelected bureaucrats is an interesting one, remind me again how many MPs the Brexit party has vs elected members of the European Parliament? I still agree that they should leave mind you, only as the absolute disaster it will be, will quickly be overturned and they can get back to joining the EU with a fresher, less antagonistic mentality.

A non-binding referendum with an undefined leave option is not a mandate to rail-road through a Brexit deal. All it justified was the invoking of A50 and negotiations for a deal which once defined should be taken back to the people in a binding referendum so they can choose between two (or even three if you include the mythical 'no deal') defined options.

If you think you can claim 'the will of the people' off the back of the initial referendum you're either poorly informed, don't understand decision making logic/processes or both. A decision of this type would always logically be run in a two step way - similar to implementation of MMP in NZ. You can't have a meaningful or informed vote on an undefined option - that's just reality.

If the british people vote for a defined leave option in a second referendum then all power to them but let's not pretend that the first referendum was either decisive or definitive. I will contend that a second purely leave/remain vote would be a waste of time, it's specifically voting on defined outcomes which is the issue here that hasn't been resolved.

I think Boris will go to an election to get his mandate rather than a 2nd referendum.

You make a coherent argument. But I'm bothered that a 2nd referendum may cause yet more trouble; logically there are 4 options (a) remain, (b) no deal leave, (c) the Boris deal, (d) some other deal. Of those I'd assume the EU would not permit (d). So that leaves three choices however the referendum is phrased so it is quite possible for none of them to get over 50% leaving the majority upset whatever the result. Of course the 'remain' option might well win and then the EU would be even more pissed off.

In the case of a multi-option referendum it would need to be run as a Single Transferable Vote in order to avoid artificially splitting or combining the leave/remain options. It's not perfect but there was never a case where everyone was going to get their first choice.

Aggregates of polls since the initial vote show a tending towards remain, this is also in-line with demographics where by younger voters are much more likely to be pro-remain hence the longer this goes on the stronger the remain vote becomes via 'natural attrition'.

When you look at how far the current deals are from some of the options being floated during the initial referendum such as Norway+, single market access etc. it's not a major leap to think that there might be 1%+ who might now tend towards remain.

Markets positive ?

Until tomorrow ............ when something comes along to change this exuberance .

The truth is we have not resolved the issues and causes of the GFC , and QE could still come back to haunt us. There is evidence of deflation in many economies , and debt is a major problem everywhere .

Shhhh - you'll ruin the party!

How much longer does this party have left that is the question.

I can imagine a lot of the debt being written off - similar to the farmer debt. Lending companies will only get back, say, 30% of the principal...and life carries on.

except all the pension funds... a 70% loss would be catastrophic

Hopefully, the deepening construction downturn in Australia drives builders and tradespeople across the Tasman to relieve some of the skill short-supply.

Or look to build prefabs and ship them across.

What time is it? OCR cut time!

We have more millionaires - wahoo. New rating valuations must have come out somewhere :)

Hope that wasn't one of the stoned workers who set off that big fire