Here's our summary of key events over the weekend that affect New Zealand, with news there are indications the giant American economy may be quickly running out of momentum.
But first up today, the world's largest IPO has been launched with Saudi Arabia listing its state-owned oil company in a US$1.7 tln float. But that is seriously lower than their target US$2 tln, and demand from outside the Kingdom is reported to be underwhelming.
Both the Chinese and Americans say their trade talks are moving forward, but most are now expecting a very watered-down "phase one" agreement that probably doesn't involve the Presidents of either country.
In a sharp adjustment, the Atlanta Fed's realtime tracking of American GDP fell to just +0.3% for Q4-2019 and that is the annual rate. Their previous estimate for Q4 was an annual rate of just 1.0%. Most other current estimates are closer to 2.0%. But the Atlanta Fed has an uncannily good recent track record.
American October retail sales came in marginally better than expected, and are now +3.1% higher than the same month a year ago. Even though the monthly gain is actually tiny, because it was unexpected, it is being called "a rebound". (For comparison, China recorded a +7.2% gain recently and New Zealand recorded a +3.4% rise on the same basis.)
American industrial production data wasn't so flash however, declining -1.1% over the year to October, and more than doubling the monthly drop from September. Inconsistently, this is not being called "a slump". Another Fed region reported overnight and business activity was expanding only very modestly.
In Japan, industrial production may have bottomed out and the latest data for September shows it rising again and a little faster than expected.
In China, new data out for October shows that house price growth is now falling away in most Chinese cities. Officially, they are "stabilising" but in many more cities we are noticing small declines, and that includes for Beijing.
In Hong Kong, official data shows a sharp turn in their economy, and into recession. For all of 2019 they expect their economy to shrink -1.1%, but for the September quarter it shrank at a rate of more than -3% pa. New street violence has flared again overnight, and the Government is threatening its employees who support the protests, and indication of how widespread the support is for the demonstrators, who can still bring tens of thousands on to the streets.
Hundreds of PLA troops have appeared on Hong Kong streets, helping to clear protester barricades, a development that wasn't requested by the Hong Kong government. They were sent in by Beijing.
In Australia, China’s embassy called on two Australian parliamentarians who have been vocal critics of the government in Beijing to “genuinely repent” and demonstrate greater respect, and they blocked the pair from visiting China. China's reach to try and stifle free speech in this part of the world is now direct and public.
At the WTO, New Zealand and fourteen other countries have taken action against the UK and the EU over Brexit, seeking trade compensation for the disruption. The claim is focused mainly on agricultural products including lamb and beef. Among the others joining the action are Australia, India, Brazil and the US.
The UST 10yr yield is little-changed at 1.84%. Their 2-10 curve is positive at +22 bps. Their 1-5 curve is weaker for the week at +11 bps. Their 3m-10yr curve is also less positive +24 bps. The Aussie Govt 10yr is unchanged at 1.16%, but that is a fall of -14 bps over the last week. The China Govt 10yr is now at 3.27%, also unchanged overnight and little changed in a week. The NZ Govt 10 yr is now at 1.41%, unchanged too and up +2 bps for the week.
Gold will start the week at US$1,468/oz which is a small +US$9 gain over the past week.
US oil prices are higher today to just over US$57.50/bbl. The Brent benchmark is just under US$63.50/bbl. US investment in 2020 for exploration is reportedly being slashed by drlllers.
The Kiwi dollar is holding at 64 USc and that is a +1.0% gain in a week. On the cross rates we are now at 93.9 AUc and an even bigger gain at +1.5%. Against the euro we are at 57.9 euro cents. That puts the TWI-5 at just on 69.2 and +90 bps higher than this time last week.
Bitcoin is firmer this morning at US$8,542. 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 ».