Here's our summary of key events over the weekend that affect New Zealand, with news of more strong gains in the relative value of the New Zealand currency as our trade gains with China multiply.
China's exports in November shrank for the fourth consecutive month when valued in US dollars but actually rose when valued in yuan, a turnaround they will be satisfied with. But growth in imports was more stronger - in both USD and yuan terms - and may be a sign that Beijing's stimulus steps are starting to work.
And China foreign currency reserves were essentially unchanged in November, holding at about US$3.1 tln and a level they have been at for all of 2019. The trade war is showing no signs of eating into these reserves.
And iron ore prices are starting to rise again, even if imports are down sharply. Prices are up more than +12% in the past month. Meanwhile China's imports of copper and oil are at or approaching record levels.
The same Chinese data showed that New Zealand exported about twice as much to China in November than we imported from them. The politically sensitive trade with the US shows their exports to the US fell -8.4% while their imports from the US fell almost -20% leaving their large surplus with the US little-changed.
In Hong Kong, there was a massive street rally in support of democracy. It is clear the Beijing-imposed administration does not have the support of the people of Hong Kong. This protest was peaceful.
In the US, consumer credit rose +4.8% in October, and more than expected, to a record US$4.165 tln or 19.3% of GDP. That is up from 19.2% a year ago. The October rise was the biggest increase in three months and was driven by a jump in use of credit cards. The rises for car loans and student loans were more modest.
American consumer sentiment also rose, underpinned by good employment numbers.
The US non-farm payrolls survey data for November came firmer than expected. +266,000 new jobs were added and there were minor positive adjustments to both prior month's data. The end of the GM strike seems to have had a cascading impact. However their low participation rate was unchanged at 63.2%, so while the rise will be welcomed, it isn't a sign more people are being drawn back into their labour market. After adjusting for the GM strike, manufacturing employment was flat, it was down for 'mining' (read: the oil patch), unchanged in retail, and up strongly in healthcare. Professional job numbers also rose.
US hourly earnings are up +3.1% over the past twelve months.
All this data supports the US Fed in its stance that their monetary policy settings are about right and markets now don't expect any change when they next meet to review those settings on Thursday, NZT.
Meanwhile, trucking companies ordered -39% fewer big-rig trucks in November compared with the same month a year ago, and that was also -21% lower than for October, a weak start for what is typically the busiest season for new-equipment orders. This comes as US freight volumes fell -5.9% in October compared with the same month a year ago, while freight rates were down -2.5% on the same basis.
You can see what is driving these declines in the latest wholesale trade data, which is -1.4% lower in October than a year ago.
And the Bank of International Settlements has said (page 12) that a combination of a reluctance of four big American banks to lend their cash reserves when some large hedge funds needed secured funding explains the gyrations in the New York repo market that caused the Federal Reserve to have to step up with emergency liquidity.
In Canada, the situation is definitely not as positive for payrolls. They recorded a drop in payrolls of -79,000 jobs in November and a rise in their jobless rate to 5.9%. But over the past year, jobs in Canada have grown by an impressive +293,000 and most of that is for full-time employment. Their participation rate is much better that their neighbours however at 65.6% and that clouds comparisons, especially of the jobless rate.
In Australia, there is more evidence of a steep contraction in their construction industry and it is now at its lowest level since 2013. The contraction dived a worrying -3.9 points in November from October alone - that is a big move.
The UST 10yr yield is at 1.84% and a similar level to this time last week. Their 2-10 curve is much more positive at +22 bps. Their 1-5 curve is more positive for the week at +11 bps. Their 3m-10yr curve is also more positive +32 bps. The Aussie Govt 10yr is at 1.15% and an +11 bps gain for the week. The China Govt 10yr is now at 3.23%, and up +3 bps for the week. The NZ Govt 10 yr is now at 1.49%, up a remarkable +19 bps for the week.
Gold is now at US$1,460/oz and down -US$4 for the week.
US oil prices are up further to just under US$59.50/bbl and that is a rise in a week of +US$4. The Brent benchmark is now just under US$64.50/bbl. Pushing them to this 3 month high has been an OPEC move to curtail supplies further.
The Kiwi dollar is on a tear, now up at 65.7 USC and +1½c higher than this time last week and at its highest since the end of July four months ago. In the past month it is up a remarkable +3.7%. On the cross rates we are firmer too, up at 96 AUc and another +1c gain in a week. In fact since the start of November we have gained more than +3c against the Aussie dollar. Against the euro we are up at 59.4 euro cents and that is also more than a +1c gain in a week. That puts the TWI-5 at just on 70.8.
Bitcoin is little-changed from where we left it on Saturday, now at US$7,527. 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 ».