Here's my summary of the key events overnight that affect New Zealand.
The price people pay for milk and dairy products in China has dropped over the past year, despite food prices rising across the board.
Milk and dairy product prices dropped 1.2% year-on-year, when averaging the January to July change. This is despite food prices rising 2.1%, with veges up 5.3% and grain up 2.5%. On the bright side for New Zealand exporters, the price of beef rose 1.3%.
Rising food prices have largely contributed to China’s consumer price index increasing by 1.3% over the year.
On the topic of dairy, futures markets are predicting the price of whole milk powder will increase a further 10% at Wednesday morning’s GlobalDairyTrade auction.
Standard & Poor's has downgraded Brazil's credit rating to junk grade, despite the government’s efforts to regain investors' trust and pull Latin America's largest economy out of recession.
The faster-than-anticipated downgrade from investment grade has rocked Brazilian financial markets and will increase borrowing costs for the government and Brazilian companies. Brazilian assets will also suffer, as the risk of investment goes up.
The US job market is continuing to gain momentum. The number of claims for unemployment benefits dropped in the week to September 5th, marking the 27th week claims remained below the 300,000 threshold, which is usually a sign of a strengthening labour market.
Yet weak inflation pressures will complicate the Fed’s decision whether to raise interest rates. US import prices fell 1.8% last month, as the cost of petrol and other goods dropped. Import prices in the US have declined in 12 of the last 14 months.
In New York, the UST 10yr yield benchmark is down slightly to 2.22%.
New Zealand 1 to 5 year swap rates have dropped 8 to 9 basis points, following the guidance from the Reserve Bank’s Monetary Policy Statement. If these levels continue, banks will have the room to cut fixed mortgage rates even further.
The US benchmark oil price has inched up to just below US$46/barrel, while the Brent benchmark is at US$49/barrel.
The gold price has risen today, but is still very low at US$1,111/oz.
The New Zealand dollar is making some gains against the US, following its plunge after the OCR was cut yesterday morning. It’s now at 63.1 US¢.
The dollar’s dropped nearly 2¢ to 89.0 AU¢, due to a mixture of our OCR cut and fairly upbeat employment data released across the Tasman. The dollar’s fallen to 55.9 euro cents and the TWI-5 has dropped to 67.5.
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 »