Dairy prices up in USD; equity markets tumble; economic data uninspiring; US Govt has big Sept surplus; oil price slumps; NZ$1 = US$0.794, TWI = 77

Here's my summary of the key news overnight in 90 seconds at 9 am, including news of skittish global markets.

First up today, the latest GlobalDairyTrade auction overnight saw prices rise +1.4% in US dollars, but because our currency also suddenly surged on the news, the overall prices in New Zealand dollars actually fell -0.4%.

Prices were up for butter and wholemilk powders, but fell for cheese and skim milk powders. Volumes sold were a respectable 50,800 tonnes and US$134 mln of product was sold.

Even though you could not claim this was a strong auction, it is the highest rise in 17 auction events and since the January 21, 2014 auction. Markets noticed and seem to be crediting the difference we have as a soft commodity producer as opposed to other hard commodity economies.

And this news is in contrast to weaker than expected data out of the US. Weaknesses in retail sales and car sales, along with producer prices were very minor and only very marginally lower than expectations. But markets are nervous about what is going on in Europe and it was enough to see a strong selloff on Wall Street. In late afternoon trade the Dow is below 16,000 and the S&P500 is approaching 1,800, both now a very long way from their 2014 highs. It is a big sell-off, and this is despite a fairly up-beat Beige Book from the US Federal Reserve.

A much larger than expected US Federal budget surplus for September seemed to impress no-one.

Adding to the gloom, an RBA official warned of a 'violent crash'. Citing the 1994 global bond market crash as a "good example," an Assistant Governor said at a conference in Sydney there were several reasons to suspect that the next sell-off, particularly in bonds, "could be relatively violent when it comes". His warning comes just as worldwide bonds make spectacular gains.

In China, consumer inflation moderated to +1.7% in September, down quite noticeably from 2.0% in August.

The UST 10yr yields continued their spectacular fall today and are now at just 2.06%. Bond investors have seen the value of their holding jump dramatically since the beginning of October. New Zealand swap rates fell yesterday on the previous move down, and are likely to fall even further on this morning's even steeper decline. Even China's swap rates slumped.

The oil price just keeps falling and is now only just over US$81/barrel with the Brent price now just over US$84/barrel. These are huge moves down and will rock the oil industry.

Gold on the other hand has taken another good jump and is now up to US$1,245/oz.

We start today with our currency level sharply higher across the board. The NZD is up more than 1c at 79.4 USc, up to 90.9 AUc, and the TWI is now just a tad under 77. 

If you want to catch up with all the changes yesterday we have an update here.

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