Here's our summary of key economic events overnight that affect New Zealand with news Wall Street and EU equity markets are trying to look past a Chinese rout and some dodgy local data.
US new home sales had a terrible month in June, made worse by a revision lower of their May data. June sales were the least for any month in more than a year and came in far below what was expected. New home sales make up less than 10% of all home sales, but it is a corner of their market that is a bellwether. Some see supply-chain shortages behind these drops and if that proves to be the case, the downturn could be just temporary.
Meanwhile the latest Fed regional factory survey, this one from Texas in July brought more stable news with only a small drift off its quite strong June expansion. New order levels remained good, and the usual indicators about strong cost pressures were in this report too as "strongly elevated".
There was another large US Treasury bond auction earlier today, this one for its 2 year Note. This one was for US$66 bln offered of which the Fed took US$6 bln. The balance got US$148 bln in bids (although that was less than the US$152 bln in bids at the equivalent auction a month ago). The resulting median yield was 0.18% pa, compared to 0.22% last time.
The extensive flooding in China has probably caused more damage that first assumed. Much will need to be rebuild. This is having an impact on commodity prices with copper rising sharply overnight, even the iron ore price recovered last week's -10% drop. China's clean-up costs will be in the tens of billions.
And a spreading set of regulatory crackdowns in China is spooking investors there with a rather fierce pullback in equity prices today in both Hong Kong and Shanghai. There was talk of 'panic selling' yesterday.
And there's more action by authorities in China; their central bank is 'asking' local authorities to impose higher mortgage rates in their jurisdictions.
Japan's July PMI brought the expected contraction in their services sector, and a modest expansion in their manufacturing sector, one similar to June.
Hong Kong's exports were strong in June, running +31% higher than in pre-pandemic June 2019.
Singaporean industrial production disappointed in June with a -3.0% slip for the month when a small rise was expected - and the slip from May's +4.4% makes it quite the miss.
In Germany, business sentiment as recorded by their IFO survey is holding high in July. They did record minor declines and report a shift away from the enthusiastic optimism of June, but these shifts are small at this stage and still leave them above pre-pandemic levels. Supply-chain concerns are behind the dip.
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In Australia, there were 145 new community cases in NSW yesterday with a record 79 not assigned to known clusters, and another 11 in the community in Victoria where their lockdown is in extension with the border closed to NSW. South Australia is also in lockdown although that may end soon. Queensland has closed it border with NSW, which is a last-resort action for them.
On Wall Street, the S&P500 has started their week with a very minor +0.1% rise in afternoon trade. Overnight, European markets were mixed between from down -0.3% in Frankfurt to up +0.2% in Paris. Yesterday, Tokyo rose a full +1.0% on the day. However Hong Kong shed an enormous -4.1% on the day, and Shanghai shed -2.3% in major sell-offs. The ASX200 ended yesterday flat, while the NZX50 Capital Index dropped -0.5% in its Monday trade.
The UST 10yr yield starts today at just on 1.27% and a -1 bp dip. The US 2-10 rate curve is to now at +108 bps and unchanged. Likewise, their 1-5 curve is unchanged at +64 bps, while their 3m-10 year curve is little-changed at +123 bps. The Australian Govt ten year benchmark rate starts today at 1.21% and up a mere +1 bp. The China Govt ten year bond is at 2.91% and -3 bps lower. The New Zealand Govt ten year is now at 1.50% and -2 bps lower.
The price of gold is now just under US$1799/oz which is down -US$3 from this time yesterday.
Oil prices have slipped very marginally and in the US they are now just under US$72/bbl, while the international Brent price is still just over US$73.50/bbl.
The Kiwi dollar opens today just on 70 USc and firmer than this time yesterday. Against the Australian dollar we are unchanged at 94.8 AUc. Against the euro we are also unchanged at 59.3 euro cents. That means our TWI-5 starts today at 73 and a minor rise.
The bitcoin price is now at US$39,227 and up another sharp +13.9% since this time on yesterday in a big move higher. Volatility in the past 24 hours has been extreme at +/- 7.7%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».