Here's my summary of the key events over the weekend that affect New Zealand, with news the head of CBA is now facing calls for his sacking.
But first, on Saturday, the US released its employment data and that showed non-farm payrolls rising by +209,000 jobs last month in broad-based gains. The strong June data was revised higher as well. Average hourly earnings rose +2.5%, maintaining the pace of the past four months. This is far ahead of US inflation which is currently running at +1.6%. Their jobless rate is now 4.3%. These signs of labour market tightness will likely clear the way for the Federal Reserve to announce a plan to start shrinking its massive bond portfolio. And it will likely keep the Fed on track for at least one more rate hike this year.
Rate rises are expected in the UK as well, maybe more than markets are expecting.
In Canada, their unemployment rate fell to 6.3% in July (from 6.5%), its lowest level in nearly a decade, and job creation is the strongest since before the global financial crisis. But wage growth remains very weak. The average hourly wage increased a mere +1.3% to C$25.79 (NZ$27.50) over July of last year, the 12th consecutive month of very soft wage growth.
Back in the US, their trade balance came in at a deficit of US$43.6 bln, lower than what markets were expecting. The goods portion was a deficit of -US$65.2 while they posted a services surplus of +$21.2 bln in June. However, while it may have beaten expectations, it is little changed from the same month a year ago.
In Europe the EU has imposed new sanctions on Russia over the transfer of EU turbines to the Crimea which Russia annexed by force in 2014. The EU's sanctions build on those by the US.
In China, a monumental shift is underway. The Chinese used to be substantial savers. But that is changing as the drive to own a home becomes a key objective of most households. As a result, the country is quickly adopting debt into their household balance sheets. The shift is swift.
In Australia, the knives seem to be out for the head of the CBA. The latest 'scandal' over the way an ATM system was rorted by money launderers, and the way the fix was handled, seems to look like the last straw for some observers, media and politicians. The fact that it was the bank who brought the issue to the attention of the regulator seems to count for little at this point. The pressure for 'change at the top' seems to be be high at present.
In New York, the UST 10yr yield was up +3 bps on the non-farm payroll report to 2.26%.
The price of oil is up slightly at just over US$49.50 a barrel, while the Brent benchmark is now just under US$52.50.
The price of gold is down -US$9 to US$1,259/oz.
And the Kiwi dollar will start today little changed at 74.2 USc. On the cross rates we are marginally lower at 93.6 AU¢, and at 63 euro cents. As a result the TWI-5 index is at 76.8.
If you want to catch up with all the 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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