US bank lending dips; durable goods orders rise; US house sales contracts fall; China services deficit narrows; UK insurers hit; Aussie eyes on C/A deficit; UST 10yr yield at 2.36%; oil and gold higher; NZ$1 = 72.2 US¢, TWI-5 = 77.5

Here's my summary of the key events overnight that affect New Zealand, with news that markets are waiting for some highly spruiked announcements from the new US president.

In the meantime, banks are showing restraint and caution lending into a Trump economy. Total outstanding bank loans have dipped for two consecutive months with declines in December and January, and that marks first time in five years that bank lending has contracted. (See line 9.)

US durable goods orders rose in January by +1.8% and came after two consecutive months of declines. Aircraft sales were a key contributor. Backlogs fell however.

A lack of supply has seen contracts to buy previously owned American homes drop in January especially in the Midwest and West regions. But prices rose sharply, with the median price up +7.1% from the same month a year ago.

And the latest reading of the Atlanta Fed's GDPNow calculator shows an American economy that will grow +2.5% in the first quarter of 2017.

In China, their trade surplus in goods is well known. But not so well known is that they run large trade deficits in services. In January, that deficit in services was NZ$29 bln, although that is a little lower than in recent months. It is also dwarfed by their trade surplus in goods, which in January was NZ$74 bln. 

Here's a story about insurance premiums and interest rates. In the UK, long term accident victims have been paid a lump sum for their loss, discounted at 2.5% pa for the period of their expected full recovery on the basis that the time value of money was related to the return on UK Government bonds, less inflation. But that formula was changed overnight to a more realistic -0.75% pa, dramatically increasing personal injury claim payouts. Company profits will suffer and share prices have been marked down. Insurers have threatened to raise premiums sharply. The industry wants their Government to change the rules to go back to the cozy deal they had.

In Australia there has been a 'blockbuster' NZ$14 bln surge in business profits in the December 2016 quarter, led by their miners on the back of resurgent Chinese minerals demand. This data has stoked speculation of a turnaround in economic growth across the ditch. It is also in contrast to wage growth over there.

Later today, the Aussies will be releasing their Q4-2016 current account data. It might be worth following because most analysts reckon that deficit could be its smallest in decades - in fact some are saying a current account surplus could be possible in future quarters. If that turns out to be the case, expect the Aussie dollar to strengthen sharply - perhaps starting later today.

In New York, the UST 10yr yield is rising again and now at 2.36%.

Oil prices are up marginally and now just over US$54 for the US benchmark, while the Brent benchmark is just over US$56 a barrel.

The gold price is up a little further at US$1,260/oz.

And the New Zealand dollar starts the day at 72.2 USc. On the cross rates we are at 93.9 AU¢, and against the euro at 68 euro cents. The NZ TWI-5 index is still in its three-week tight range at 77.5.

If you want to catch up with all the changes yesterday, we have an update here.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».