Here's my summary of the key events over the weekend that affect New Zealand, with news of a sharp pull-back in risk this morning.
But first, US jobs growth is proving fairly resilient despite global headwinds. The non-farm payrolls report out on Saturday showed +151,000 new jobs were added in January and their unemployment rate slipped to 4.9%. Their participation rate was unchanged. But more impressive is that wage growth has emerged, with this up +2.5% year-on-year. And given CPI inflation was just +0.7% in the past year (not seasonally adjusted), real wages are growing handily.
However, surveyed consumers see inflation dipping. An increasingly important gauge of American inflation expectations slipped last month to its lowest level since the Federal Reserve Bank of New York began the survey in mid-2013. Some see this as a warning bell for the Fed in Washington, especially as those surveyed see inflation at +2.4% in the coming year.
Markets are worried this morning however with Wall Street down about -2% in all three indexes. They are following similar - even larger - declines in Europe. A slower Asia is perhaps catching up on sentiment.
But it is not slowing everywhere. India said GDP expanded +7.3% in last year’s fourth quarter, as consumer and government spending lifted their economy. Such a rapid clip has put India ahead of China as the world’s fastest-growing major economy - at least according to official data, and there is some questions about that for India, as there are for China. (But different questions, to be fair.)
Trader behaviour at the Aussie banks, an ASIC investigation being carried on ANZ is widening into a systemic probe. This is an investigation that probably won't end well for any of the four pillar banks. Market chat screen conversations may be at the heart of the document trail and it is reported these look ugly.
In New York, the benchmark UST 10yr yield has dropped sharply today to 1.78%. More ominous, CDS spreads have jumped sharply on Wall Street this morning and are now at their highest level since August 2012.
The US WTI oil price is lower today. The US price is now just over US$30 while Brent is just under US$33.50/barrel.
The gold price however has had an eye-catching jump, up US$36 this morning to US$1,194/oz and that is back to prices we last saw in April last year. (In NZD it is back to prices we last saw in September 2015.). Maybe part of the jump can be ascribed to the low level of Chinese production of gold.
And China's foreign exchange reserves have dropped by US$100 bln - again - to US$3.2 tln at the end of January, their central bank said Sunday. These outflows are starting to become seriously regular, and stopping them may be as difficult as stopping a run on a bank. This is the cost of defending the yuan.
The NZ dollar is still pretty much unchanged from where we left it on Friday, now at 66.4 US¢, at 93.4 AU¢, and at 59.4 euro cents. The TWI-5 starts today at 71.1.
If you want to catch up with all the local changes on Friday, we have an update here.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».