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PBOC pledges yuan won't devalue more, AUS housing market expected to cool, US retail sales up, oil prices plummet; UST 10yr yield 2.16%; oil below US$42/barrel; NZ$1 = 65.7 US¢, TWI-5 = 70.2

PBOC pledges yuan won't devalue more, AUS housing market expected to cool, US retail sales up, oil prices plummet; UST 10yr yield 2.16%; oil below US$42/barrel; NZ$1 = 65.7 US¢, TWI-5 = 70.2

Here's my summary of the key events overnight that affect New Zealand, with news the US oil price has hit a 6-year low.

But first, the People's Bank of China is trying to restore calm to jittery global markets, as the yuan slides for the third day straight. The Bank sparked fears of a currency war, dragging other Asian currencies to multi-year lows, after it devalued the yuan on Wednesday.

It's now come out saying it doesn't expect the currency to further depreciate, as China's robust economy is providing "strong support" for the exchange rate. Yet the reality is weak economic data, and expectations of more interest rate cuts later in the year, are fueling speculation authorities could let the currency weaken even more.

Across the Ditch, one of their largest home builders has warned the Australian residential property market is slowing, with double-digit price growth coming to an end. After reporting a 36% profit increase for the year, Mirvac says Sydney's rampant growth is tailing off.

It says previous cycles suggest the volume of sales should moderate by about 15% over the next year or two, despite supply remaining an issue. Mirvac's call comes just as the Real Estate Institute of New Zealand announced Auckland house prices took a breather in July.

Data out of the US shows retail sales rebounded in July, as households bought more cars among other goods. Retail sales rose 0.6% in July, broadly in line with economists' expectations. Figures for May and June have been revised up, indicating buoyancy in the economy that points to a Federal Reserve interest rate hike next month.

The US oil price has hit a six-year low, falling below US$42/barrel to March 2009 levels. Brent crude has sunk to just under US$49/barrel. US stockpiles remain at their highest levels for this time of year in at least 80 years. OPEC reports it also pumped the most oil in three years during July.

Moody's ratings agency expects prices to remain at historical lows until 2018. It believes prices will average at around US$50/barrel this year and rise to only $60/barrel next year.

The gold price has dropped US$9 today, to US$1,114/oz.

In New York, the UST 10yr yield benchmark has increased, but remains low at 2.16%.

The New Zealand dollar has weaken compared to this time yesterday. It's dropped to 65.7 US¢, 89.3 AU¢, and 59.0 euro cents. The TWI-5 is at 70.2.

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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Source: CoinDesk

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9 Comments

ALBERT EDWARDS: Chinese devaluation is leading to 'a financial market rout every bit as large as 2008'
http://uk.businessinsider.com/albert-edwards-rest-of-the-world-will-imp…

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dp

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Prepare for sub-1% 10y Treasury yields and another financial crisis as policy impotence is soon revealed to all.

Someone else predicting that US Treasury yields will fall in half, yet again - it just doesn't get better for bond owners - the bubble gift that keeps on giving. Remind me again, about the +$100 trillion bonds and associated ~$500 trillion interest rate derivatives outstanding globally? An NPV wealth transfer bonanza awaits all who position on the receiving side of fixed coupon paying instruments, synthetic or not.

Unfortunately, events have not panned out do well for FX Target Redemption Forwards (Tarfs) participants. Let the FX traders deal with them.

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You guys used to graph mortgagee listings - not any more it seems (since early 2014). Did REINZ stop collating the data?
http://www.interest.co.nz/charts/real-estate/mortgagee-listings

I recall Terralink used to produce data?
A reasonable proxy for the health of the housing market/general economy I would have thought...

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There's 78 on TradeMe this morn. Perhaps that's a starting point for future comparison?

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Should read " Don't panic, the Chicoms are trying to restore calm.........by panicking"
What the hell is going on over there; a little correction on the stock (bubble) market and they end up buying half the listings and banning selling. Sorry, that's not a market worthy of the name. Then they dump their currency with the obvious consequence of exporting deflation to the rest of the world. And people seem to think they know what they're doing!

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How different is it to the measures taken by Western governments in the wake of the Global Financial Crisis? Its a matter of politicians and bureaucrats delaying, extending, and pretending to cover their asses and ensure nothing bad happens on their watch. Leave it to their successors to pick up the mess.

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Monkey see monkey do?

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My reading of the chinese devaluation is they agree with the saudi strategy in the oil market
They will do anything to maintain their market share and keep their customers.
Fonterra?

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