Here's our summary of key events overnight that affect New Zealand, with news that steel output in China is retrenching and falling away fast now.
But first up today, we had another dairy auction overnight and another positive one. Prices were up for the fifth consecutive time, this time recording a +1.7% gain in US dollars and +0.9% in New Zealand dollars. Both WMP and SMP posted out-sized gains and in fact SMP prices breached US$3000/tonne for the first time since August 2014 and WMP prices are their highest since late 2016. The cumulative rise for all of 2019 is now +22% in US dollars and +30% in New Zealand dollars. These gains underpin the firming payout forecasts and there is probably upside if they continue as many analysts expect.
In the US their expected October rebound in new housing starts occurred, but they were not as strong as expected. Building permit levels however did come in as expected.
In Canada, workers at their largest rail network are on strike which will affect Canadian economic statistics. The network has recently announced it is cutting jobs as it deals with a weakening North American economy that has eroded demand.
In China, crude steel output fell -4.7% in October from the previous month to 2.6 mln tonnes per day, decelerating from a -2% decline in September.
And Beijing is reacting with fury that the top Hong Kong court ruled the local mask ban contravenes Hong Kong's Basic Law. Beijing will reject anything that prevents their mass surveillance programs. China seems ready to emasculate Hong Kong's legal framework.
In Hong Kong, HSBC said it will close a bank account that is being used to raise funds to support protest-related activities in the city. The account has been used to pay legal and medical fees for protesters.
In Australia, the minutes from the November 5 RBA rate review meeting show it was a lot closer to cutting than markets predicted, but opted for a "wait and assess" approach. The release of their thinking has hit Aussie bond yields, and New Zealand yields have suffered some collateral declines too.
And the Aussie Prime Minister, who once scorned the value of renewable energy projects in South Australia, has become a convert, adding Federal funds to increase the size of the Tesla battery there by at least +50% to become an 150 megawatt facility.
Just how positive the economic situation in New Zealand is, is again illustrated by the OECD 2019 growth update. Year-on-year GDP growth for the OECD area was stable at +1.6% in the third quarter of 2019, and that was only held up by the US at +2.0%. New Zealand however is expected to record +2.4%.
The UST 10yr yield is down another -3 bps today and now at 1.78% and softening. Their 2-10 curve is positive but tightening at +19 bps. Their 1-5 curve is also tighter at +8 bps. Their 3m-10yr curve is also less positive +22 bps. The Aussie Govt 10yr is down -3 bps at 1.13%. The China Govt 10yr is now at 3.22% and a -1 bp overnight dip. The NZ Govt 10 yr is now at 1.39%, down -2 bps.
Gold is unchanged at US$1,473/oz.
US oil prices are sharply lower today to just over US$55.50/bbl. The Brent benchmark is just over US$61/bbl. Both represent further falls of more than -US$1/bbl.
The Kiwi dollar is firm this morning at 64.3 USc. On the cross rates we are now just over 94.1 AUc. Against the euro we are over 58 euro cents. That pushes the TWI-5 up to just on 69.4.
Bitcoin is softer this morning at US$8,094 and an overnight drop of -3.7%. These are starting to accumulate; since the beginning of the month the bitcoin price has fallen -11%. 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 ».