Here's my summary of the key news overnight to keep you up-to-date over these holidays.
American existing home resales lost momentum and tumbled to a six-month low in November after two straight months of strong increases.
The data underscored the uneven nature of their housing market recovery.
The median price for all housing types in November was US$205,300, which is 5.0% above November 2013. This marks the 33rd consecutive month of year-over-year price gains. Inventories of unsold homes fell.
Bonus season in the financial district of London will be good this year. They are expecting a 12% increase in bonuses for 2014 (+21% in UKP.)
The average bonus is seen increasing to NZ$250,000 from NZ$205,000 a year earlier. This will bring bosses bonuses to 60% of their average salary, up from 54% in 2013.
New York may not see as big a percentage increase although the amounts may be higher.
Locally today we get the trade balance data for November at 10:45am and a NZ$575 mln deficit is expected by the markets. Plus we get a whole bunch of credit data at 3pm.
In China, a major banking transformation is unfolding. Mainline Chinese banks are hemorrhaging cash. That is because China's savers have been pouring money into online money-market funds offered by the likes of Alibaba and Baidu. Yu'ebao, pioneered last year by Alibaba affiliate Alipay, drew 535 bln yuan (NZ$110 bln) in its first 15 months of existence from 149 million customers, (which is larger than the combined populations of France and the Britain). Users simply tapped a few buttons on their mobile phones to secure an annual rate of return that soared as high as 6.8% before falling to about 4% recently.
In response, the banks are offering their departing savers cash rebates, trips abroad, iPhone 6's, cars, interest rates at the highest premium ever over the official benchmark rate, or even free vegetables. But the competition is expensive and they are getting nothing but higher costs from this situation. New deposits are 23% lower this year than last and costs are skyrocketing to win them.
This type of disruption is every banker's fear and it is going on right now in China.
In the oil markets, prices fell again last night after the recent but small bounce. The benchmark US price is back down to US$55/barrel and the Brent benchmark is just on US$60/barrel. There are plenty of anecdotal reports of standard unleaded petrol being available at local service stations after discount at or under NZ$1.80/litre.
The fall in the oil price has been described by the IMF as a "shot in the arm" for the global economy. They see the net benefits far outweighing the downsides. Certainly, Europeans are seeing benefits. But don't tell that to the Aussies. Certainly don't tell the Russians that.
Gold is also down, down sharply in late New York trade and is now at just US$1,180/oz. Not only does it not return any income, it is failing to return any price gains and failing to be an inflation hedge. It is tough times for the yellow metal.
UST benchmark 10yr bond yields are basically unchanged at 2.18% today. New Zealand swap rate should flat-line today.
The NZ dollar starts today at 77.3 USc, 95.1 AUc, and the TWI is at 78.4.
The easiest place to stay up with event risk over the holiday period is by following our Economic Calendar here »
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