Here's my summary of the key events overnight that affect New Zealand, with news our election uncertainty is causing our credit spreads to rise.
But first in the US, consumer confidence rose to a five-month high in August as households grew increasingly upbeat about their labour market. And house prices rose further in June. Both pieces of data suggests a recent rise in consumer spending is likely to be sustained.
The US is planning to raise premiums and place tighter loan limits on some borrowers in their government guaranteed reverse mortgage program.
In China, they say they are making a big effort to control local government debt, which has now reached US$2.4 tln, or 21.4% of GDP. (The NZ equivalent level is 4.5% of GDP.) They have signaled this previously without much impact, but the public nature of these latest warnings indicate the issue has Beijing's full attention.
In Australia, there are rising concerns about the pressures the Chinese government is putting on their student nationals to pressure Australian university staff to support Chinese policies. Called 'red hot nationalism', some students are being used to protest academic freedoms that run counter to the Chinese narrative. The pressure can be effective because about 30% of foreign students are Chinese.
In New York, the UST 10yr yield is lower and now at 2.13%. It got down to 2.09% overnight but is recovering now. The NZ sovereign CDS spread is taking on some election risk and has risen from under 20 to almost 25 in just the past week. This has happened as most sovereign spreads have narrowed. This comes as more fund managers signaled they are shifting investment out of the country in the election run-up. And our 2-10 swap curve got flatter overnight in a bear shift and is now at just +92 bps.
The price of crude oil has stabilised at its lower level after a further small slip and is now just under US$46.50 a barrel, while the Brent benchmark is just over US$51.50.
The price of gold has gained a small extra overnight, up another +US$3 to US$1,314/oz which is a three month high.
But the Kiwi dollar is basically unchanged today at 72.5 US. On the cross rates we are still at 91.2 AU¢, and 60.5 euro cents. And the TWI-5 index is still at 74.6. And we should note that the euro has hit a 33 month high against the US dollar overnight, posing a heightened challenge for the ECB.
If you want to catch up with all the changes on yesterday 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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