Biden gets his infrastructure deal; US productivity gains underwhelm; iron ore price falls again; German sentiment wavers; Aussie business confidence falls; UST 10yr 1.34%, oil recovers and gold holds low; NZ$1 = 70 USc; TWI-5 = 73.3

Here's our summary of key economic events overnight that affect New Zealand with news there has been a risk sentiment improvement in markets, but most markets are shallow with light volumes during this northern hemisphere summer holiday period.

But first, we should note that the US Senate has now finally passed a US$1 tln infrastructure package that is a top priority for the US Administration, a bipartisan victory that could provide the nation's biggest investment in decades in roads, bridges, airports and waterways. The vote was 69-30 in the 100-seat chamber, with 19 Republicans voting 'yes'. (There is debate about how large the approved Plan actually is.) Immediately after that vote concluded, Senators pushed ahead with a follow-up US$3.5 tln spending package that Democrats plan to pass even without Republican votes.

American labour productivity improved in the June quarter according to official stats, but the gains were less than expected. It rose +2.3% as output increased +7.9% and hours worked increased +5.5%. A gain of +3.5% was expected and that was less than the actual Q1 gain of +4.3%. So in their terms, this is quite a miss.

There was another US Treasury 3yr bond auction overnight and this one brought a higher yield than the month-ago event. In both US$68 bln was available and the Fed took US$10 bln. The remaining US$58 bln got US$147 bln in bids which was slightly more than last time. The median yield this time was 0.42% pa for this 3year bond, up from +0.38% last time.

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In China, even though the country is on summer holidays, the iron ore price continues its downward track. Corn and rice prices are falling now too.

In Germany, economic sentiment fell again in August, continuing its fall away since May. Firms are actually quite bullish about their local situation but the threat from delta COVID, and the clear slowdown in China, have both cast a long shadow over how German firms view their future export prospects.

In Australia, business sentiment fell sharply in July, according to the widely-watched NAB survey. Both conditions and confidence deteriorated sharply in the month, with the latter now back in negative territory. Unsurprisingly, due to its size and the severity of the lockdown in the state, NSW drove much of the result this month. Both confidence and conditions fell sharply following a full month of lockdown in the state. That said, conditions fell in all mainland states, with SA in particular also seeing a very large fall.

There were 360 new community cases in NSW yesterday with another 209 not assigned to known clusters, so they are still not getting on top of their outbreak. Victoria reported 20 new cases yesterday. Queensland is reporting 3 new cases. Overall in Australia, more than 22% of Aussies are fully vaccinated, 44% have now had at least one shot.

Wall Street has firmed marginally lower in Tuesday trade, with the S&P500 up +0.2% so far. Overnight, European markets were up between +0.1% and +0.4%. Yesterday, Tokyo finished up +0.2%, Hong Kong ended its session up a very strong +1.2% and Shanghai again rose +1.0%, all with late flurries. The ASX200 ended up +0.3%. The NZX50 ended up +0.5% and making back the prior day's drop.

The UST 10yr yield starts today at 1.34% and up another +2 bps since yesterday. The US 2-10 rate curve is still just on +110 bps and unchanged. Their 1-5 curve is steeper at +74 bps, and their 3m-10 year curve is also a bit steeper at +129 bps. The Australian Govt ten year benchmark rate starts today at 1.22% and unchanged. The China Govt ten year bond is at 2.89% and also unchanged after yesterday's recovery. The New Zealand Govt ten year is now at 1.71% and up a rather large +8 bps overnight.

The price of gold is staying down, but at least it didn't fall further overnight. It rose +US$2 from this time yesterday to US$1732/oz.

Oil prices are back up +$2.50/bbl from this time yesterday, so in the US they are just over US$68.50/bbl, while the international Brent price is just over US$70.50/bbl.

The Kiwi dollar opens today still just on 70 USc. Against the Australian dollar we are little-changed at 95.3 AUc. Against the euro we are firm at 59.8 euro cents. That means our TWI-5 starts today still at 73.3 and still in the narrow range of between 72 and 74 we have been in for ten months now.

The bitcoin price has taken a step sideways today and is now at US$45,979 which is down -0.9% from this time yesterday. Volatility in the past 24 hours has been moderate at just over +/- 2.3%.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».