Here's our summary of key events overnight that affect New Zealand, with news all eyes will be on the RBNZ today.
But first on Wall Street, equity markets are up +0.2% today which is about half the rise overnight in Europe. In Shanghai yesterday, their equity market rose a similar +0.2%.
In China, their ratio of outstanding liabilities to gross domestic product, called the macro leverage ratio, rose to over 251% at the end of September 2019 according to a leading government think tank. They may talk about deleveraging but they are going in the opposite direction.
However, the prognosis is not all bad. Orders for construction machinery have reached a new high for Chinese manufacturers, although the key driver of their recent growth is export orders. Manufacturers however are expecting new local stimulus will bolster their domestic sales.
In Hong Kong, the city is in a parlous state with widespread demonstrations against their government which seem to be escalating. The local government's hard-line with Beijing support is losing even more support among Hong Kongers. The local government is now readying tax breaks for the wealthy in an attempt to encourage them to stay and damp down capital flight.
Japanese machine tool orders are still in a seriously depressed state, down -37% in October from the same period last year and that is slightly worse than the September result.
In Germany, the closely watched ZEW survey came in more positive that expected, especially for sentiment and expectations. It is still negative to be sure, but the improvement was marked and unexpected.
In Australia, the widely-watched NAB business sentiment survey has brought a tiny improvement in October with conditions edging up +1 pt and confidence lifting +2 pts, though both remain well below average. These results won't be changing any views, policies or decisions.
And yesterday's big bank result from CBA has an interesting element in that it shows the recent tax cut money are increasingly being parked in bank term deposits. For CBA, they are up more than +10% despite them paying virtually nothing in interest. The Aussie tax cut was designed to increase consumption, and that is just not happening. Perhaps helicopter money just doesn't work as effective stimulus as have been assumed.
All eyes today will be on the RBNZ at 2pm when they present their Monetary Policy Statement and OCR review. In a sudden turn, most analysts are now expecting a -25 bps rate cut after yesterday's downbeat survey of expectations. This will be the last formal rate setting review until February 2020 so there is a sense today's policy settings have to cover an unusually long period when global uncertainty seems to be high.
The UST 10yr yield is lower at 1.92% and a -3 bps slip. Their 2-10 curve is positive at +26 bps. Their 1-5 curve is firmer for the week at +14 bps. Their 3m-10yr curve is a positive +35 bps. The Aussie Govt 10yr is down -1 bp at 1.29%. The China Govt 10yr is now at 3.27% which is unchanged. The NZ Govt 10 yr is now at 1.37% which is a -2 bps drop.
Gold is down another -US$2 to US$1,453/oz.
US oil prices are little-changed at US$57/bbl. The Brent benchmark is just over US$62/bbl.
The Kiwi dollar will start today at 63.3 USc and marginally softer after the rising expectation the OCR will be cut today. On the cross rates we are at 92.5 AUc and giving up almost all of yesterday's rise. Against the euro we are softer too at 57.5 euro cents. That puts the TWI-5 at just on 68.5.
Bitcoin is holding lower at US$8,699. 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 ».
We welcome your comments below. If you are not already registered, please register to comment
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.