Here's my summary of the key events overnight that affect New Zealand with news the clamp on funds exiting China is starting to bite in our region.
But first, the latest reading of the American service sector shows a strong expansion, reaching a 12 year high and confounding some analysts with the scale of the strength. The 'new order' component was particularly strong. Another similar showed gains as well above expectations.
The pre-cursor ADP employment survey showed jobs growth of +135,000 in September, perhaps held back by hurricane disruptions, but bang on analysts expectations. The US non-farm payroll gains are expected by the market to be +80,000 when announced on Saturday. Both data are the lowest numbers of the year and I suspect there is some upside here.
A strongly expanding American economy explains growing trade data elsewhere in the world. Double-digit growth in airfreight volumes continued in August. Global volumes increased a remarkable +12.1% year-on-year and volumes in the largest region - Asia/Pacific - grew +11.3%. Airfreight capacity is also expanding. This growth explains the expansion in world trade and why Asian economies are making export gains. But clearly, growth at this rate cannot go on indefinitely and industry insiders say they are nearing a peak.
The Europeans are getting tougher on the tech industry's tax deals. The European Commission said overnight it was taking Ireland to the European Court of Justice for its failure to recover up to €13 bln of tax due from Apple, a move being resisted by the Irish. It also told Amazon to repay Luxembourg €250 mln in "illegal" tax benefits.
Meanwhile, EU retail sales growth stalled in August after a longish growth run. This might come at an awkward time for the ECB who must be contemplating following the US Fed and halting more QE.
Ireland has just raised €4 bln in a new bond issue. But what makes this special is that it is at a negative interest rate. The debt, which drew more than €10 bln of demand and was mostly sold to overseas investors, attracted a yield of -0.008%, far below the 1.05% interest rate Ireland said its residual IMF loan balance carried last year.
In Australia, there is mounting evidence of stalled projects, undermined by the inability of their Chinese owners ability to raise funds to press ahead. They are caught in the clamp on moving money overseas by China's currency agencies. And remember in Auckland, there are some very large developments dependent on Chinese developers (the long-delayed NGD Tower for example), not to mention the sale of UDC to HNA which is still uncompleted.
In New York, the UST 10yr yield is holding at 2.33%.
The price of crude oil is down slightly yet again and now barely over US$50 a barrel, while the Brent benchmark is under US$56. There was a big fall reported in US crude inventories in the past week.
The price of gold is basically unchanged today, still at US$1,272/oz.
And the Kiwi dollar is also unchanged from this time yesterday, still at 71.6 US¢, a three month low. On the cross rates we are now at 91.2 AU¢, and 60.9 euro cents. Our TWI-5 index is now at 74.3.
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 ».