Here's my summary of the key events overnight that affect New Zealand.
Federal Reserve policymakers are increasingly wary of weak inflation, with some calling for a halt to further interest rate hikes. Minutes from the US central bank’s meeting in July reveal some officials think it’s likely inflation will remain below 2% for longer than expected, with others arguing delaying a hike could cause an overshooting in inflation "that would likely be costly to reverse”. The minutes show the Fed is increasingly ready to start reducing its US$4.2 trillion portfolio of Treasury bonds and mortgage-backed securities.
A prominent Fed policymaker is standing up to Donald Trump, calling his plans to unwind banking regulations a “terrible mistake”. Trump has wants to repeal a major piece of post-GFC legislation to make it easier for banks to lend. Yet Stanley Fischer says doing so would put institutions back in the boat they were in before the financial crisis 10 years ago. “I find that really, extremely dangerous and extremely short-sighted," he says.
Staying with Trump, he’s been ditched by the US’s top CEOs. They have stepped down from two of the Government’s advisory councils to condemn his defiant remakes about violence at a white nationalist rally. Shortly after their move was revealed, Trump took to Twitter to announce he’d be dissolving the groups.
Back home, Ratings agency Fitch says our four major banks are in strong positions with AA- ratings. It expects their performance to remain “robust” over the next year. Yet Fitch warns macroeconomic risk is high, with New Zealand households very indebted. While an improving dairy sector and slowing house price growth in Auckland are a reprieve, we’re still susceptible to rising unemployment and interest rates. Fitch also notes banks’ reliance on offshore funding, due to a lack of deposits. Nonetheless it says funding remains “stable”.
Over to the UK, its labour market looks a bit like ours. Employment in Britain has hit a near record high, but workers’ pay packets are still being squeezed as their productivity slides. In the three months to June the unemployment rate fell to 4.4%. Meanwhile average weekly earnings grew 2.1% year-on-year.
In New York, the UST 10yr yield has eased back today to 2.26%.
The US benchmark oil price is down a little to just under US$47 a barrel, while the Brent benchmark is at US$50.
The gold price has increased to US$1,282/oz.
The Kiwi dollar has strengthened to 73.2 USc. On the cross rates we are down a little to 92.2 AU¢, and up to 62.2 euro cents. The TWI-5 index has jumped to 75.7.
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 ».