Here's our summary of key economic events overnight that affect New Zealand, with news that risk appetites seem to be improving today.
But first up, there was a dairy auction today with prices in US dollars coming in down -1.0%. But the rising Kiwi dollar has undermined that soft result further and in local currency prices are down -3.3%. Volumes sold were the highest of 2020 but prices are now the lowest, in either currency. The key WMP prices fell -2.0% while the SMP price rose +1.8%. But there is now no hiding from the fact that overall prices in New Zealand dollars are now at their lowest since the start of 2019. We are now in territory where farmgate milk payout prices will be under consideration.
In the US, the Fed's balance sheet is starting to rise again and now tops US$7 tln. Within that and driving the recent rise, is their buying of mortgage-backed securities, and their holdings now exceed US$2 tln.
US retail sales are rising now, and quite strongly. Last week the US Redbook data showed a +4.6% year-on-year rise and a significant improvement from the flat result the week before on this basis. Month-on-month gains are strong too (+5.8%).
The widely watched ISM factory PMI was up in August too, expanding at a good rate now with good new order levels. But their employment subcategory is still contracting at about the same rate, so no turnaround there.
The internationally benchmarked Markit PMI for the US is expanding too, but not as strongly. But this one does show a rise in employment in the factory sector.
This are similar in Canada's factories but with an even faster expansion of payrolls.
And a Canadian banking regulator is rolling back rules on deferred mortgages. They can no longer be considered 'performing' if they have been deferred.
In China, local governments accelerated bond issuance in August, issuing ¥1.2 bln with total bond sales (NZ$260 bln), the second highest monthly level ever after the NZ$280 bln in May. Their state railway completed more than 1300 kms of new routes in the first six months of 2020. The old Chinese "investment" playbook is in full operation now.
And China's private factory PMI survey came in more expansionary than the official one.
Hong Kong retail sales are still in the pits. They were down -23% year-on-year, no improvement from the -25% drop in the previous month.
Core inflation in the EU came in less than expected in August and much lower than for July, and is heading back down to zero and below. But all that negative pressure is only coming from oil prices, so consumers are getting a net benefit.
In Australia, they have been hit with another Chinese trade action. It largest cooperative grain exporter with 4000 members has been told its exports are no longer welcome - because of invented 'pest detection' claims. China is tightening the screws.
And the RBA issued its monthly update, maintaining all its current settings. It extended it its Term Funding Facility access to AU$200 bln. And it is altering its language signals, showing it is considering further loosening of unconventional stimulus if the economic and financial situation need it. And it is clear they currently think this is likely.
In New York, the S&P500 is up 0.4% in afternoon trade today. Overnight there were mixed results in Europe, although London fell a sharp -1.7%. Yesterday, Shanghai closed up +0.4%, but Hong Kong and Tokyo managed little gain. The ASX200 ended down -1.8% and the NZX50 Capital Index was down another -1.2%.
The latest global compilation of COVID-19 data is here. The global tally is 25,560,000, up +260,000 since yesterday. Global deaths reported now exceed 852,000 (+5,000 in one day).
Just under a quarter of all reported cases globally are in the US, which is up +36,000 in a day to 6,226,000 and a relentless rise. US deaths are now just over 188,000 and a death rate of 568/mln (+2/mln). The net number of people actively infected in the US rose overnight to 2,575,000 (+3,000), so more new infections than recoveries.
In Australia, there have now been 25,819 COVID-19 cases reported, and that is only +73 more than yesterday. Although most are in Victoria, it is definitely abating there. Australia's death count is up to 657 however (+5). Their recovery rate is up over 83%. There are 3664 active cases in Australia (-85) indicating a turned tide and more recoveries than new infections.
The UST 10yr yield is down -2 bps today at 0.67%. Their 2-10 curve is marginally flatter again at +55 bps. Their 1-5 curve is also flatter at +13 bps, and their 3m-10yr curve completes the flattening trend at +59 bps. The Aussie Govt 10yr yield is down -4 bps at 0.94%. The China Govt 10yr is unchanged at 3.06%. And the NZ Govt 10 yr yield is also unchanged at 0.63%.
The price of gold is up a modest +US$3 today to US$1,971/oz.
Oil prices are little-changed again today at just under US$43/bbl in the US while the international price is just over US$45.50/bbl.
The Kiwi dollar marginally higher again today and now at 67.6 USc. Against the Australian dollar we have risen to 91.6 AUc. Against the euro we are back up to 56.7 euro cents. That means our TWI-5 is slightly firmer at 70.1.
The bitcoin price is up +2.2% from this time yesterday at US$11,994. 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 ».