Here's our summary of key events overnight that affect New Zealand, with news of low inflation and low wage growth in key global economies.
First in the US, the optimism for a US-China trade deal is souring as the Americans threaten "substantially more tariffs" if the Chinese don't agree to their terms. They clearly think the Chinese are in a weaker position than the data shows they really are and those political assumptions are blinding Washington. A new detailed study by Harvard economists shows that it is American consumers that have paid almost all the costs of US tariffs, while the Chinese suppliers seem to have paid little.
US household debt rose in the third quarter of 2019 to US$13.95 tln and that is now 64.8% of GDP and even though it increased by +$440 bln in just one year, it is down from 65.1%. (The equivalent level in New Zealand is 96.1% and rising.)
In testimony before Congress, the Federal Reserve boss said he saw little reason to change their policy settings at their next meeting.
Hong Kong equities have fallen sharply again as another day of anti-government protests cast a shadow over future the city as an independent financial center and rattled investors. The Hang Seng index fell -1.8% yesterday. In Shanghai, stocks fell -0.3%. Mainland Chinese students in Hong Kong are leaving en masse, it seems, many "called home".
China said it will lower the equity capital ratio for investment in ports and shipping infrastructure projects from 25% to 20% as part of their stimulus boosting programs.
In Australia, their recent minimum wage increase has not succeeded in turning around weak wage growth there which fell to +2.2% in the year to September, a decline from +2.3% a year ago and the slowest in more than a year. By comparison, the equivalent New Zealand changes show hourly rates of pay up +4.2% in the same period and near a multi-year high.
And a new report says that even with no policy changes, house prices in Sydney and Melbourne are likely to jump more than +10% in the next year based on latent demand. Then they will fizzle again, the report says.
The UST 10yr yield is lower at 1.89% and a -3 bps reduction. Their 2-10 curve is positive at +24 bps. Their 1-5 curve is firmer for the week at +12 bps. Their 3m-10yr curve is a positive +33 bps. The Aussie Govt 10yr is down a sharpish -7 bps at 1.22%. The China Govt 10yr is now at 3.27% which is unchanged again. The NZ Govt 10 yr is now at 1.49% which is a massive +12 bps rise to 1.49% following the RBNZ signals.
Gold is up today, up +US$8 to US$1,461/oz.
US oil prices are a little-firmer at US$57.50/bbl. The Brent benchmark is just over US$62.50/bbl. The IEA is saying that oil demand will start to weaken substantially from 2025 onward.
The Kiwi dollar will start today at 64 USc having changed very little overnight. On the cross rates we are up more than +1c at 93.7 AUc. Against the euro we are firmer too at 58.2 euro cents. That puts the TWI-5 at just on 69.3 and a +80 bps gain in a day.
Bitcoin is holding lower at US$8,746 with very little net change 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 ».