Here's my summary of the key events overnight that affect New Zealand, with news of strong labour market gains in Australia.
But first, OPEC has agreed to cut crude oil production and that has sent oil prices sharply higher. It is a 'win' for American frackers and reverses OPEC's policy of holding prices low to drive them out of business. But in the end, low prices only hurt OPEC more and if anything made the surviving frackers more resilient and a stronger threat. However, some see this agreement to restrain output as a 'last gasp' roll-of-the dice for OPEC.
Germany is beset with big bank troubles. Yesterday it was Deutsche Bank, now its second largest bank, Commerzbank, is to cut 9,600 people from its workforce and end dividend payments to shareholders as it struggles to maintain its capital. This is the second large German bank on struggle street. The job cuts represent about 20% of its workforce, (which is about the same size as Australia's CBA). It is also a recent first for a bank to draw shareholders into the restructuring pain.
It is Golden Week in China next week and essentially the country will be closed. It is also a time when there are cash liquidity strains. Right on cue, China’s benchmark money-market rate climbed to a 14-month high yesterday as the central bank pulled funds from the financial system and commercial lenders stocked up on cash to meet quarter-end requirements. The seven-day repurchase rate, the benchmark gauge of funding availability in the financial system, rose 12 basis points to 2.75%. That’s the most expensive since July 2015, eclipsing the Golden week spike last year.
In the US, pending home sales volumes slipped in August from July, but are still up +4% from the same month a year ago, and that is higher than analysts were expecting.
On the US labour market front, initial jobless claims on a seasonally adjusted basis rose marginally last week, although on an 'actual' basis there was a sharp fall in benefit claims.
And in Australia, there are signs their job market is improving. Job vacancies there jumped by nearly +5% in the three months to August to hit the highest level since mid-2012. Total job vacancies rose to almost 180,000 in the June-August quarter, up from 164,000 in the three months to May, data released yesterday showed.
In New York the UST 10yr yield was higher today, up to 1.59% at one point, but has fallen away and is now down to 1.56%
The US benchmark oil price is up sharply, and is now just under US$48 a barrel, while the Brent benchmark is now just over US$49 a barrel. They would have risen more, but there is widespread scepticism about whether the OPEC agreement will actually hold.
The gold price has slipped slightly again, now at US$1,323/oz.
The New Zealand dollar is a little higher today than at this time yesterday, now at 72.7 US¢, and on the cross rates it is at 95 AU¢, and 64.9 euro cents. The TWI-5 index is now at 75.8.
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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