Here's my summary of the key events overnight that affect New Zealand, with news there was one spectacular loser at the Melbourne Cup yesterday.
But first, the overnight dairy auction brought sharp gains. It was correctly signaled by the futures market this time. Overall prices are up +11.4% in US dollars, over +12% in New Zealand dollars.
More spectacularly, WMP prices are up +20% to levels we haven't seen since July 2014. Overall prices are up to levels last seen in March 2015.
Despite the dramatic improvement, the New Zealand dollar has reacted little so far.
Elsewhere, Wall Street extended losses in late trading today, with the S&P500 near a four-month low, weighed down by weak construction spending data and growing uncertainty surrounding the American presidential election.
In the UK, KPMG is reporting that European banks are now stuck with NZ$1.8 tln in bad loans, and it will "take decades rather than years" to get these bad assets out of the system.
In Melbourne, there were winners yesterday in the big race, but of course most people lost. That is the nature of gambling. But there was one spectacular loser. Despite devoting the best part of two decades, and more than a billion dollars to winning the Melbourne Cup, Sheikh Mohammed fell short yet again. He entered five horses, including the favourite, and still lost.
In Sydney, it was much more level-headed. The RBA held its policy rate unchanged at 1.50%.
In New York, the UST 10yr yield ws up +1 bp today to 1.85% after briefly flirting above 1.88%. But in late trade it has slumped to 1.82%.
The US benchmark oil price is down again and is now just over US$46 a barrel, while the Brent benchmark is under US$48 a barrel. There has been a major pipeline explosion in the US.
The gold price higher however, now at US$1,289/oz.
The New Zealand dollar is pretty much unchanged this morning, now still at 71.6 US¢. On the cross rates it is at 93.6 AU¢, and against the euro at 64.8 euro cents. The NZ TWI-5 index is at 75.5.
If you want to catch up with all the local changes on Friday, we have an update here.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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10 Comments
How seaweed eating super cows will save the world
http://inhabitat.com/how-seaweed-eating-super-cows-will-save-the-world/
"De Nys and his research team at JCU tested 20 different varieties of seaweed, which is known to aid in digestion and reduce gaseous emissions even in humans. (Beans are often cooked with kombu, a type of seaweed, in order to make them less of a ‘musical fruit.’) Where cows are concerned, scientists found that the species of red seaweed called Asparagopsis taxiformis is most effective in reducing methane burps, and they have been harvesting it off the coast of Queensland to aid in their research. Using an artificial cow stomach that operates a bit like a compost bin, the research team found that a diet consisting of two percent red seaweed and 98 percent typical feed resulted in methane levels that were 60-70 percent lower than without seaweed."
I thought that this was interesting, seeing that our (?) government has agreed to tax us to death with the Carbon Market.
Of course the Kiwi$ has not reacted to the dairy price rise , because currency traders have either priced it in , or dont think its sustainable .
Lets not forget , the players in the market have access to much of the information driving prices , there is little information asymmetry nowadays
In Sydney, it was much more level-headed. The RBA held its policy rate unchanged at 1.50%.
Financial markets are functioning effectively. Funding costs for high-quality borrowers remain low and, globally, monetary policy remains remarkably accommodative. Government bond yields have risen, but are still low by historical standards.
Effective for whom, other than the already propertied?
I think the new RBA governor is an amateur comedian - does he not perceive low interest rates signal financial dysfunction, hence tight credit conditions for the majority? The 10yr Commonwealth Government bond priced at ~2.38% signifies little else other than moribund economic opportunities ahead.
What people observe as “cash on the sidelines” is nothing other than a mountain securities that have been issued in the form of short-term money market instruments, and those instruments will remain “on the sidelines” until they are retired. In the meantime, every single one of them will have to be held by someone. They do not “flow” anywhere. They simply change hands, and changing hands doesn’t affect their quantity.
http://www.hussmanfunds.com/wmc/wmc161031.htm
US citizens slowly but surely having the opaqueness removed from their politicos. God bless Wikileaks (doing the job that MSM is either unwilling or unable to do). The absence of MSM's commentary on the recent Wikileaks dump is admission enough of a reluctance to bite the hand that feeds.
Additional sideshows such as Donna Brazile's blatant lie to Fox's Megan Kelly only for her to be exposed days later and Anthony Weiner's (the gift that keeps on giving) despicable behaviour merely fans the anger building up on Main Street.
If Trump doesn't get up this time, fast forward 4 years and the political landscape in the US will be unrecognisable. The game is well and truly over.
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