Here's my summary of the key events from over the weekend that affect New Zealand, with news authorities are putting more restrictions on property buyers keen to invest in China's second and third tier cities.
Authorities in the eastern city of Nanjing are the latest to restrict residents who already own homes from making further purchases. The move, which attempts to cool rising property prices, will no doubt give cashed-up Chinese more reason to look further afield for investment opportunities.
The US presidential election is taking centre stage for Wall Street investors, ahead of the first debate between the candidates overnight. While the election hasn't had a huge effect on markets so far, this could change as the race tightens. Hilary Clinton's lead in opinion polls has evaporated, and with just over six weeks until Election Day, some investors see the contest creating volatility in sectors like health insurance, pharmaceuticals and manufacturing.
The latest economic data released shows that outside of the labour market, the US is continuing to go through a soft patch. The September Markit PMI has disappointed markets, despite employment elements improving. Europe's manufacturing and services equivalents are also mixed.
Credit cards are being introduced to Iran. The oil producer is eyeing world markets further to the economic sanctions against it being lifted in January. The head of Iran's central bank has cautioned it will take some time for banks to get used to the credit card system. It's been reported cards will have limits of up to US$15,000.
In New York the UST 10yr yield has inched up since Friday to 1.62%.
The oil price has dropped as some of the world's major producers express hesitation around freezing output, ahead of a possible output limiting deal being discussed at a forum this week. The US benchmark oil price is now just above US$44 a barrel, while the Brent benchmark is at US$46 a barrel.
The gold price is stable at US$1,337/oz.
The New Zealand dollar has fallen back over the weekend to 72.4 US¢, 95.0 AU¢ and 64.5 euro cents. The TWI index has dropped to 75.5.
ANZ economists say global forces are continuing to sway the dollar. They don't expect it to fall much further.
If you want to catch up with all the local changes from Friday, 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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6 Comments
The latest economic data released shows that outside of the labour market, the US is continuing to go through a soft patch.
Rising inflation and economic opportunity are reflected in higher interest rates and a steeper yield curve.
The US T10yr cannot even discount the Fed's inflation target.
New Zealand's 10yr NZGS @ 2.38% hardly depicts much more, given it's dependence on foreign buyer benevolence.
The government underwrites US property values:
Since 1999 year-end through 2015 home prices have risen 76% while household mean real income has grown less than 2%; the millennium-to-date gap between the two growth rates peaked at 84% during 2005-2006 and has risen back to 74% as of 2015 year-end. Gap at year-end 2007 was 75%.
This millennium through 2015 has seen average new and existing home sale prices rise 84% and 55%, respectively, despite the lack of income growth.
Another severe downturn in home prices would be unlikely to play out in the agency MBS market in like manner to 2007-2008 as the Fed now holds ~33% of the outstanding universe and the U.S. taxpayer now guarantees almost all of the market with Fannie and Freddie remaining under government conservatorship. Read more
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