Here's my summary of the key events over the weekend that affect New Zealand, with news of improving business sentiment in China.
But first, American consumer prices rose more than expected in August as healthcare costs recorded their biggest gain in more than 30 years, and there was a sustained increase in rents and insurance. Excluding food and energy, prices are up +2.3% over the year. Stirring inflation will be welcomed by the Fed policy makers when they meet this week. Signs of American inflation will also influence the bond markets.
China's holdings of US Treasuries fell in July to the lowest level in more than three years, as the world's second-largest economy pares its foreign-exchange reserves to support the yuan. China is the biggest foreign holder of American government debt at $US1.27 tln in bonds, notes and bills in July, down $US22 bln from the prior month, in the biggest drop since 2013. The holdings by Japan, the largest holder after China, rose $US6.9 bln to $US1.20 tln. Domestic holdings of this debt are the biggest proportion, with 52% or almost US$7 tln. China's claim is a bit less than 10%, likewise by Japan.
Confidence among Chinese entrepreneurs has picked up for the second quarter running, according to the People's Bank of China. Their survey showed business confidence was +2.2% higher than in the second quarter. Factory output and retail sales grew faster than expected in August, on the back of a strong housing market and government infrastructure spending.
The bank also released new loan data and that is higher too. New loans grew more than expected in August but were still dominated by housing lending. The monthly total grew to almost +950 bln yuan (+NZ$195 bln), compared with July’s total of +460 bln yuan. Markets had expected and increase of +750 bln yuan (+NZ$155 bln).
Across the border in Hong Kong, a "mad scramble" is going on in their property markets. Hong Kong’s property market is up by +35% in volume in the first two weeks of this month, according to industry experts.
In addition to major assessment announcements from both the Fed and the RBNZ this week, the Bank of Japan is also due to report. This one actually may be more interesting that the other two, because market speculation suggests they may try something quite new - policy settings to specifically target the overall yield curve, rather than just the official interest rate. They certainly need to do something different. But the problem for the Japanese is that such moves just look like they are running out of bullets to deal with structural deflation.
In Australia, the AFR reports that the CEOs of the four major Aussie banks will be grilled for three hours each in front of an Australian parliamentary inquiry. The hearings will be in the first week of October, a non-sitting week for Parliament because it's their school holidays.
In New York the UST 10yr yield is unchanged today at 1.70%.
The oil price will start the week lower, with the US benchmark price now just on US$43 a barrel, while the Brent benchmark is now just under US$46 a barrel.
The gold price is also lower, now at US$1,306/oz.
The New Zealand dollar will open lower as well, at 72.7 US¢, and on the cross rates it is at 97 AU¢, and 65.1 euro cents. The TWI index is now at 76.3.
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 ».