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US job openings at record high; HSBC in huge cutback; BIS says banks need more capital; China deflation concerns grow; UST 10yr yields rise; NZ$1 = 71.4 US¢, TWI-5 = 75.4

US job openings at record high; HSBC in huge cutback; BIS says banks need more capital; China deflation concerns grow; UST 10yr yields rise; NZ$1 = 71.4 US¢, TWI-5 = 75.4

Here's my summary of the key issues from overnight that affect New Zealand, with news of deflationary pressure building in China.

But first, American job openings surged to a record high in April and small business confidence rose in May. 

There are now high expectations of a Fed rate hike 'soon' and markets are adjusting to the realisation.

In Europe, HSBC announced huge new cutbacks. The British bank plans to shed up to 25,000 full-time jobs over 2 years and another 25,000 by selling units in Brazil and Turkey, while increasing investment in Asia. But there is no mention of cuts in New Zealand. It is a big climb-down for one of the world's biggest banks.

And banks may soon be required to hold more capital following updates the BIS announced yesterday. They are concerned about the risks inherent when banks lend large in times of low interest rates. When rates rise, the risks of such lending books rise too.

In Australia, house borrowing commitments continue to swell.

And earlier this morning, the OECD issued its latest survey of the New Zealand economy which was generally positive.

In China, their consumer inflation eased in May to +1.2%, which is almost its lowest in 15 years, while producer prices fell for the 38th straight month by -4.6%, raising real concerns about a growing and embedded deflationary pressure as their economy cools.

Back in New York, UST 10yr benchmark yields are back up again today by +4 bps to 2.42%. 

Also up are US oil markets, by another $2 with the US benchmark price now at US$60/barrel, and Brent crude is at US$65/barrel.

The gold price is also up, by +$4, to US$1,177/oz.

However, this morning the New Zealand dollar is pretty much unchanged, currently at 71.4 US¢, at 93 AU¢, and at 63.2 euro cents. The TWI-5 is now at 75.4.

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

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

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2 Comments

HSBC is not just one of the biggest banks. It is the biggest bank apart from ICBC, apparently.

http://www.bbc.com/news/business-33058957

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I note that of the 10 largest banks in the world, 4 of the largest banks are in China, 1 in the US.

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