US consumers waiver; Washington muddled on trade talks; China trade surplus grows; China's CPI jumps, PPI slumps; global airfreight volumes declining; UST 10yr yield at 1.95%; oil holds but gold down; NZ$1 = 63.3 USc; TWI-5 = 68.5

Here's our summary of key events over the weekend that affect New Zealand, with news global trade volumes are turning downward and the declines are deepening.

But first in the US, the early November reading on consumer sentiment was nearly identical to last month's and at the average 2019 level. American consumers did have a slightly more positive outlook for their economy, which was offset by a slightly less favourable outlook for their own personal finances. Many are less happy about current conditions now, but their view of future prospects is holding.

American wholesale inventories continue to climb, up almost +5% in a year although the most recent data suggests the rise-and-rise may be easing.

In Washington, there are muddled messages coming from the US Administration. Officials have been talking up the imminent trade deal with the Chinese that includes tariff rollbacks. But the President has said he isn't considering such rollbacks. China is confused. But markets are positioning for a rally if a deal does eventuate.

In China, their international trade activity in October came in much better than expected. Exports were down only marginally, and imports fell more than -6% year-on-year but that was a smaller decline than for September. As a result, their trade surplus swelled. The politically sensitive surplus with the US at +US$26.4 bln was little changed.

And China's current account surplus in Q3 slipped only marginally from +US$57 bln in Q2 to +US55 bln.

China's consumer prices spiked higher than expected in October. They rose +3.0% in September and analysts had expected a +3.2% rise in October but in the end they rose +3.8% in October driven by a +15% rise in food prices. Pork prices have doubled, beef prices are up +20% and lamb prices up +16% year-on-year. These rises hit rural areas much harder than in the cities. However, for core inflation - which excludes food and energy prices - pressures remain modest.

In contrast, China's producer prices are fading. Year-on-year they fell -1.6% and a slightly faster annual fall than in September. This is data that aligns with October factory activity data.

And China is raising production of rare earth minerals. It holds a 70% market share and its American rivals see this as a strategic threat so are encouraging alternative supplies, especially from Australia. But the Chinese are raising production by +10% and that will keep prices depressed and undermine the commercial viability of the US efforts. Rare earths are indispensable for high-performance magnets mounted on electric vehicle motors, as well as for advanced weapons such as drones and missiles.

In Canada, a range of data came in weaker than expected. That included jobs growth, building permits and housing starts.

And the iron ore price is now starting to move into negative territory. From the end of October it is down more than -10%, from the end of July it is down a third.. From the start of 2019 it is still up +15% however but clearly those large Aussie trade surpluses won't do on much longer unless volumes or prices start to turn up. There is no volume growth prospect from China however.

And Australia is facing unexplained hurdles for getting food exports to China approved. This involves both new consents and customs clearances at the border.

And globally, airfreight volumes remain weak. The September data reveals a -5.0% decline in international airfreight year-on-year, and in the Asia/Pacific region the decline was -5.9%, both steeper drops than for August. This is now eleven months of consecutive declines, the longest since the GFC.

The UST 10yr yield is at 1.95% and holding its recent higher level. Their 2-10 curve is positive at +27 bps. Their 1-5 curve is firmer for the week at +16 bps. Their 3m-10yr curve is a positive +39 bps. The Aussie Govt 10yr is at 1.30%. The China Govt 10yr is now at 3.30%. The NZ Govt 10 yr is now at 1.39% which was a sharp rise at the end of last week.

Gold is down another -US$3 to US$1,459/oz.

US oil prices are little changed at just over US$57/bbl. The Brent benchmark is just over US$62.50/bbl. However, pricing may get tested today as the Iranians reveal details of their large new discovery.

The Kiwi dollar will start the week at 63.3 USc and more than -1c lower than this time last week. On the cross rates we are at 92.3 AUc. Against the euro we are at 57.4 euro cents. That puts the TWI-5 at just on 68.5.

Bitcoin is up sharply this morning at US$9,026, a rise of +2.8% overnight and recovering a bit more than half the earlier drop. 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 ».