Good morning, wherever you are. Here's our summary of key economic events overnight that affect New Zealand, with news of a respite in global tensions.
Wall Street is +½% higher today on the general news that trade tensions seem to be easing, and Middle East political tensions are as well. Overnight, European equities slipped on most exchanges, except London - a rare reversal.
Yesterday, Asian equity markets were quite bullish. Shanghai was up +0.8%, Hong Kong was up +1.1% and Tokyo was up +0.5%. The Aussie equity market slipped -0.4% while the NZX50 was virtually unchanged.
In China, even though it is the largest car market in the world selling more than 26 mln vehicles per year, they expect sales will decline -2% in 2020. Generous state subsidies for non-petrol/diesel vehicles will continue.
This is having a flow-on impact as China's steel manufacturers continue output at record levels even as key customers are buying less. Beijing is alarmed at the rising losses. A big shakeout is coming. Australia is unlikely to ship as much iron ore in 2020 as it did in 2019.
In the Philippines, the Mt Taal volcanic eruption, while initially dramatic, is now expected to burst into a huge event soon. Large numbers of people are being evacuated. The fear is that it could have wide regional climate impacts.
In Australia, the bush fire emergencies have changed the political views on climate change, and they are likely to get embedded following their Royal Commission inquiry into the disaster. Fossil-fuel-energy jobs will become the flash-point.
And the wider financial markets are likely to be impacted, according to Standard & Poors. They said, "The recent bush fires will have a flow-on effect on local employment in industries such as tourism and agriculture, which could lead to debt-serviceability pressures for affected borrowers."
The UST 10yr yield is now up to 1.84% and a rise of +2 bps overnight. But their 2-10 curve is little-changed at +26 bps. Their 1-5 curve is still at +12 bps. And their 3m-10yr curve hasn't moved much either at +31 bps. The Aussie Govt 10yr is at 1.24% and very similar to where it was yesterday. The China Govt 10yr is also similar at 3.15%. And the NZ Govt 10 yr is in the same groove at 1.48%.
Gold will start today down -US$11 at US$1,551/oz.
US oil prices are lower again today now just over US$58.50/bbl and the Brent benchmark is down too at US$64.50/bbl.
The Kiwi dollar is unchanged at 66.3 USc. On the cross rates we are slightly softer at 96 AUc. Against the euro we are at 59.6 euro cents. That puts our TWI-5 at 71.5. Beijing is still letting the yuan strengthen deliberately against the US dollar and its now back to levels we last saw in August 2019. It seems to be part of the Phase One trade deal.
Bitcoin is also unchanged since this time yesterday at US$8,096. 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 ».