Here's our summary of key events overnight that affect New Zealand, with news the Chinese see a real prospect of a trade deal with the Americans.
But firstly in the US, productivity unexpectedly fell in the September quarter and by the most since 2015, as output increased by much less than the number of hours worked. Their expansion has turned unproductive, which is a somewhat ominous sign.
The latest data on US mortgage applications has them slipping -1%, and mortgage interest rates also fell marginally. But given the recent sharp rise in UST benchmark rates, American mortgage rate hikes are a real prospect now and that won't help their housing market.
China announced that it and the United States have agreed to cancel in phases, the tariffs imposed during their months-long trade war, but they didn't give a timetable for the rollback.
That has helped Wall Street post gains today with the S&P500 up +0.5% so far. European markets were up a little more overnight. Yesterday, Shanghai and Tokyo were flat, but Hong Kong was up a healthy +0.6% on the trade rumours. The ASX200 rose +1%.
In Japan, the recent typhoon has knocked their service sector, with it's expansion suddenly stalling in October. Their recent GST price hike probably didn't help either as many purchases were brought forward. A bounce back in November is likely however.
The latest EU PMI survey shows that the bloc remains stagnant withy no expansion. Germany is the drag with industrial production there falling faster than expected, and even the German services sector has stopped expanding. France is the bright spot. EU retail sales are still growing faster than +3% pa however.
In London, England, their central bank kept its benchmark policy rate unchanged at 0.75%. But two voting members broke ranks and voted for a rate cut in a sign worries about recession risks are rising there. And there are signs the UK Government is about to release huge fiscal stimulus with some serious deficit spending.
Australia has posted a better-than-expected trade balance on the back of high iron ore volumes. The +AU$7.2 bln surplus in September took their annual trade surplus to more than +AU$63 bln for the year (+4.4% of GDP), and way above the +AU$12.5 bln surplus in the equivalent previous 12 months. But iron ore prices are now falling back, and some analysts are warning the boom is over.
The UST 10yr yield is has risen further, now at 1.94% and its highest level since July. Their 2-10 curve is positive at +26 bps. Their 1-5 curve is now +16 bps. And their 3m-10yr curve has jumped to be at +41 bps. The Aussie Govt 10yr is following the USTs up, now at 1.31%, a rise of +4 bps. The China Govt 10yr is doing its own thing, down -1 bp at 3.28%. The NZ Govt 10 yr is also not following the Wall Street trend, now at 1.32% and down -4 bps overnight.
Gold has slumped further, down more than -US$19 today so far to US$1,465/oz which is another -1.3% dive in a day and takes the fall in just the first week of November to -3%.
US oil prices are firmer again, now just over US$57.50/bbl. The Brent benchmark is just over US$62.50/bbl.
The Kiwi dollar has slipped back a little further to 63.5 USc. On the cross rates we are another -½c lower at 92.1 AUc and that is actually its lowest level in a year. Against the euro we are little-changed at 57.5 euro cents. That puts the TWI-5 down at 68.6. We should also mention that the Chinese yuan is rising fast in the past few days, pushed by Beijing authorities back to the 7-to-the-US-dollar level and probably part of their 'negotiation' to get a tariff deal over the line.
Bitcoin is -1.5% lower overnight at US$9,193 and that is its lowest level for the month so far. The bitcoin rate is charted in the exchange rate set below.
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