Here's my summary of the key events overnight that affect New Zealand with news China's clamp on outbound 'investment' has been very effective.
But first, today's dairy auction was an uninspiring event for everyone involved. Overall prices were down -1% in US dollar terms, fractionally more in New Zealand dollar terms.. The key WMP price was down less, by -0.5%. It was the sharp fall in the skim milk power price that caught the eye, down -5.6% and back to levels last seen in May 2016. And the butter price was also weak, down -2.5%, but it is still at a relatively high level. Overall dairy prices though have held in a very tight range since that big jump one year ago. Today's -1% fall is the second in a row however on top of the -2.4% two weeks ago. The industry will want to be sure that this trend doesn't continue if it is to hold its new season payout forecasts.
Meanwhile on Wall Street, the Dow Jones Industrial Average rose above the 23,000-mark for the first time earlier today, boosted by strong earnings reports. But it has slipped lower in later trading. The broader S&P500 index is also slightly lower.
New data from the OECD shows that all the gains in employment post GFC have been in the services sector. Most of those gains have been impressive. But manufacturing and agriculture have both raised output via mechanisation rather than adding people.
Broadly in line with market expectations, American industrial output picked up modestly in September, a sign a key sector of the economy is weathering the hurricane-related disruption that hit the prior month. Industrial production rose +1.6% year on year in September.
Canada’s banking watchdog unveiled tougher mortgage-financing rules that take effect on January 1, 2018 that could further sharply slow mortgage borrowing and therefore house buying in Canada. These rules involve a +2% interest rate stress test, tighter LVR rules, and measures to prevent banks from circumventing the LVR regulations. In many ways their 'new' approach mirrors recent RBNZ and RBA actions.
China's outbound direct investment dropped a massive -42% year on year in the nine months to September. There was only US$78 bln released, an average of US$15 mln for each of the 5,159 companies approved. That fast slowing takes outbound investment to countries involved in the Belt and Road Initiative to US$9.6 bln accounting for only 12% of the total ODI. Those Belt & Road investments are the ones getting approval, reinforcing the idea that politics rather than opportunity is playing a new heavy role in rationing these funds.
New analysis by S&P has dismissive of China's efforts to control leverage in their economy, calling moves so far as "baby steps" that don't really address the risks involved.
In London, Swiss bank UBS asked staff overnight whether they would prefer to relocate to Amsterdam, Madrid or Frankfurt after Britain leaves the European Union in a survey sent to its investment bankers. London's role in the European financial system is starting to unravel and the speed seems to be accelerating. An OECD plea will however probably fall on deaf ears.
In Australia, the release of the RBA's minutes shows them warning that any further increases in the currency would hurt growth. And they say they are not about to raise their 1.5% benchmark interest rate any time soon because high levels of household debt and weak wages growth are "likely to be constraining influences".
In New York, the UST 10yr yield is now at 2.30%.
The price of crude oil is slightly lower today and now just over US$51.50 / barrel, while the Brent benchmark is just over US$57.50.
The price of gold however is down very sharply, slumping -US$19 to US$1,284 oz.
However the Kiwi dollar will start today pretty much unchanged at 71.7 US¢. On the cross rates we are higher at 91.4 AU¢, and at 61 euro cents. Our TWI-5 index is now at 74.4.
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 ».