Here's my summary of the key events over the weekend that affect New Zealand, with news the economic outlook in the West seems to be brightening.
On Wall Street, equities touched their highest levels in two weeks as a flurry of deal activity and strong quarterly earnings boosted investor confidence.
October data signaled that American factories have started October in a strong fashion, with output and new order volumes rising at markedly faster rates than in September. A rebound in business conditions contributed to greater input buying among manufacturing firms and renewed pressures on capacity. Input cost inflation has risen to its strongest for almost two years.
In Europe there are also some definite green shoots. The pace of economic growth there rose to the highest seen so far this year in October, led by a growth upturn in Germany, according to PMI survey data. Faster growth of order books and an acceleration in the pace of hiring also augur well for the region's economy to continue to strengthen in coming months. Inflationary pressures meanwhile showed signs of picking up, with the survey recording the largest increase in prices charged, for over five years.
The European Union's hopes of signing a landmark free trade deal with Canada appeared to evaporate overnight as the Belgian federal government failed to win the consent of local politicians in their French-speaking region. Any country in the EU can block such deals, and either region in Belgium can block Belgian approval. It is a wonder the EU can get anything approved.
New research shows that the world’s highly skilled immigrants are increasingly living in just four nations: the US, Britain, Canada and Australia. It is research that highlights the challenges of the brain drain for non-English-speaking and developing countries. And although the UK is in this exclusive list, it is also one of the largest source of talent for the other three.
In New Zealand, our tax authorities have launched a series of audits into the tax arrangements of international technology firms after they found "anomalies" in their filed New Zealand accounts.
In Australia, their banking regulator is bringing in rules that borrowers must be strong enough to repay their mortgage if interest rates rise to 7%. (see page 14.) I wonder how many recent investor borrowers in New Zealand, let alone first-home buyers, could meet that standard here. On a $500,000 loan, that will involve additional weekly payments of $179. APRA are also insisting on banks being much more inquisitive on supporting statements of income and expenses, wanting more independent verification.
In New York, the UST 10yr yield is higher at 1.77%.
The US benchmark oil price has slipped today by nearly -US$2, now just under US$50 a barrel, while the Brent benchmark is now just under US$51 a barrel. A refusal by Iraq to join output restraint is the catalyst for the drop. This is despite the World Bank raising its 2017 oil price forecast, which seems to have been ignored.
The gold price is down -US$6, now at US$1,262/oz.
The New Zealand dollar is a lower too, at 71.3 US¢, and on the cross rates it has had a small pullback against the Aussie to 93.8 AU¢, and the euro to 65.5 euro cents. The NZ TWI-5 index is now at 75.6.
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 ».