Here's our summary of key events overnight that affect New Zealand, with news the energy seems to have leaked out of the US:China trade talks.
First up however, American housing sales in October haven't rebounded as analysts expected. They did rise marginally but the bounce was weak. But earlier 2019 growth still leaves them up +4.6% year-on-year.
Nationally, new unemployment claims are rising again.
More positive was the next regional Fed survey to report in, this one from Pennsylvania. While their general factory index rose, orders, shipments, and employment indicators all decreased.
Canada is starting to have an employment problem with the number of new jobs now falling and reversing recent trends. Worryingly, most of the falls are in their service sector.
China’s chief trade negotiator has reportedly invited his American counterparts for a new round of talks, as both sides are struggling to strike a limited deal to help de-escalate tensions. But markets aren't sensing real progress here, rather stale reruns. And geopolitical pressures aren't helping either. Neither are the Washington impeachment hearings.
Consumer confidence actually edged up in November in the EU in a report out today. It is still net-negative, but above its long term average levels.
The OECD says trade conflict, weak business investment and persistent political uncertainty are weighing on the world economy and raising the risk of long-term stagnation. World GDP growth is expected to be just +2.9% this year - its lowest annual rate since the GFC - and remain at this low level in 2020 and 2021. Mainly that is because they see US growth slipping to under +2% in the next two years. China's growth is falling too, but it is still expected to expand well above +5%. They see New Zealand expanding at +2.5% next year and Australia by +2.3%. Global GDP expanded +3.5% in 2018.
This forecast has cast a pall over equity markets today. Wall Street is down -0.2% in mid-day trade. Overnight European markets fell a similar amount. And yesterday Shanghai was down -0.3%, Tokyo was down -0.5% and Hong Kong dropped -1.6% as public policy positions harden there against keeping the City with an independent judiciary.
In Australia, disbelief grows at how Westpac allowed an old piece of software to let so many AML breaches occur, especially after CBA had been convicted of the same error and paid a AU$700 mln penalty. Not learning from their rival's mistake makes the Westpac breach seem so much worse. Some observers think Westpac CEO Hartzer will be gone within a week. Complex software that hides flaws are an existential risk for businesses required to act as law enforcement agencies for Governments that can't or won't do their own enforcement.
The UST 10yr yield is up +4 bps today at 1.78%. Their 2-10 curve is unchanged at +17 bps. Their 1-5 curve is also still at +7 bps. Their 3m-10yr curve is now at +20 bps. The Aussie Govt 10yr is up +3 bps at 1.11%. The China Govt 10yr is now at 3.% and a -1 bp overnight dip. The NZ Govt 10 yr is now at 1.33%, down another -3 bps.
Gold is unchanged at US$1,468/oz.
US oil prices are +US$1 higher today again, now just over US$58/bbl. The Brent benchmark is just over US$63.50/bbl.
The Kiwi dollar is a unchanged this morning at 64.1 USc. On the cross rates we are firmer at just over 94.4 AUc and another three month high. Against the euro we are at 57.9 euro cents. That leaves the TWI-5 at just on 69.4. We should also note that Beijing as let the yuan weaken overnight, releasing it from the very stable level it has held during the trade negotiations with the US.
Bitcoin is sharply lower this morning at US$7,574 and down -6.7% since this time yesterday to its lowest level since May this year. 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 ».