Here's our summary of key events overnight that affect New Zealand, with news of a confusing mess of negative public policy moves.
The political mess in Washington is unsettling markets today. Wall Street is down more than -1% today compounding yesterday's losses. For the week we are now down -2%. It looks like the Chinese aren't going agree a 'phase one' deal unless the US rolls back tariffs - and the US Administration is saying "there is no time limit" and is backtracking on imposing more tariffs which were due to kick in on December 16. The US is also adding to the list of allies it is offending, this time in Europe, after adding Brazil and Argentina yesterday.
France and the EU said they were ready to retaliate if the US acted on a threat to impose duties of up to 100% on imports of champagne, handbags and other French products worth almost $4 bln in annual trade.
Some European markets fell, others rose. The biggest reduction was for London, England which is down -1.8%.
Risk is back and markets are reassessing how this risk is priced. This time, New Zealand seems to be favoured with a rising currency.
The OECD released some standardised education test results and that shows New Zealand performing better than the OECD average. But it is a sinking standard and New Zealand education achievement levels are sliding relatrive to other countries. In fact, in math we are now below OECD averages. These are long term declines in achievement that started here in 2000 and haven't improved at any time since. It's a topic that should get more public discussion as neither side of politics has policies that are making progress. It can't be an excuse that Australia is performing worse, as is the US. American standards may be low, but at least they are not falling further. The worst bit is that New Zealand is now far behind Chinese education levels.
Australia has recorded another current account surplus, this time +AU$5.2 bln in Q3-2019. Its goods surplus was a whopping +AU$21.9 bln. (If you read other reports, these numbers will be higher because others are reporting 'seasonally adjusted' results; we are reporting 'original' results.) This means for the full year, Australia's current account surplus is +AU$3.9 bln and its goods surplus is +AU$66.7 bln. (In the year to September 2018 they had a -AU$48.3 bln C/A deficit, so the shift in one year has been enormous.)
There was a rate review in Australia yesterday, and the wait-and-see / gentle-turning-point policy remains. But the Aussie equity market took fright yesterday, down -2.2%.
There was also a dairy auction overnight. This one broke the string five rises with a small -0.5% fall. But both the key SMP and WMP commodities managed a gain even it they were minor. Overall in New Zealand dollars however the result was down -1.9% on the rising exchange rate, being pushed up by Government stimulus announcements and expectations.
Bond yields are on the move, and quite dramatically. The UST 10yr yield has fallen back sharply today, now at 1.70% and a -13 bps fall since this time yesterday. Their 2-10 curve is has narrowed sharply, now at +17 bps. Their 1-5 curve has turned negative -4 bps. Their 3m-10yr curve is also sharply narrower +8 bps. The Aussie Govt 10yr is at 1.07% and that is a -7 bps fall since this time yesterday. The China Govt 10yr is now at 3.23%, and a +1 bp rise. The NZ Govt 10 yr is now at 1.43%, and +7 bps rise.
Gold is +US$18 at US$1,480/oz.
US oil prices are little-changed today at just on US$56/bbl. The Brent benchmark is just on US$61/bbl.
The Kiwi dollar is marginally higher, now at 65.2 USc. On the cross rates we are now staying up at 95.3 AUc. Against the euro we unchanged at 58.8 euro cents. That leaves the TWI-5 up over 70.3.
Bitcoin is firmer today at US$7,327 and up +0.6% from this time yesterday. 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 ».