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Here's our summary of key events overnight that affect New Zealand, with news the flow of important global economic data isn't that impressive today.
Durable goods orders levels are considered key data indicating where the giant American economy is headed, and today's release isn't bringing good news. A dip was expected but they fell more sharply in October than that, a clear reversal from the September rise. Worse, the October 2019 levels are -4.0% lower than those for October 2018. And it gets even more grim when you look at orders for capital goods - they are down -9.6% in October 2019 from the same month a year ago. The trade wars are taking a real bite out of the American economy.
The story doesn't get much brighter on the residential sales front. Existing home sales fell -2.2% in September from August, although at least they are still marginally higher than the same month a year ago. Historically low mortgage rates aren't inducing buyers back into their market. And the sharpish turn up in the past week or so won't help either.
American data isn't all negative. The early look at their factory PMIs shows they are still expanding even it only just. And their services sector is in a similar position. Both flash PMIs are up in October, but the expansion both are recording is actually still very weak - and both record weaker expansion than for China (by the same data series). The American PMI data suggests that US growth is running at just +1.5% pa at present.
In Canada, they are now seeing their housing market in recovery mode after two years of declines.
The ECB met overnight and have decided to keep their interest rate settings on hold. But they confirmed they are restarting QE at the rate of €20 bln per month. This was the final act of ECB boss Mario Draghi and there were no surprises today. From now on it the ECB will be led by Christine Lagarde.
Europe needs that QE because its PMI surveys show the bloc in stagnation.
In China, their residential property market is coming under increasing stress. More property developers in China are cutting prices on new homes to boost sales and raise cash amid flagging demand and a tougher environment for debt refinancing. In fact, in one case a large firm pleaded with its sales employees to buy unsold properties.
And their central bank is pumping in more liquidity to their financial system, in fact +NZ$125 bln in the past week alone. But this has more to do with their impending corporate tax payment deadline than anything else.
The latest World Bank survey of the ease of doing business, still has New Zealand in the number one position. Australia is #14.
In Australia, an auction of short-term Australian government debt yesterday failed to draw enough bids to sell the AU$1 bln of notes on offer, a rare miss that has not happened since 2012. It didn't miss by much however, receiving offers of AU$936 mln. New Zealand has had an occasional event like this, that last one also in 2012. And we had a linker bond issue in 2015 where the Treasury decided not to accept any bids.
And the latest Aussie PMI survey shows their factory expansion slowing.
The UST 10yr yield is unchanged today at 1.75%. Their 2-10 curve is positive but unchanged at +18 bps. Their negative 1-5 curve has widened to -8 bp. But their 3m-10yr curve has stayed just positive at +1 bp. The Aussie Govt 10yr is lower again at 1.06%, a fall of -3 bps. The China Govt 10yr is unchanged at 3.24%. The NZ Govt 10 yr is now at 1.26%, down -2 bps since this time yesterday.
Gold has jumped, up another +US$9 on top of yesterday's +US$8, now at US$1,501/oz.
US oil prices are firmer again today, now just under US$56.50/bbl. The Brent benchmark is just over US$61.50.
The Kiwi dollar is almost -½c weaker against the greenback today, now at 63.8 USc. On the cross rates we are soft as well at 93.6 AUc. Against the euro we are at 57.5 euro cents. That puts the TWI-5 down at 68.9.
Bitcoin is still lower and is now at US$7,454 and little-changed after yesterday's sharp dip. 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 ».