Here's our summary of key events over the weekend that affect New Zealand, with news some key international benchmark interest rates have moved higher.
Firstly in the US, a failed effort at a bipartisan resolution to their immigration issues may have made it more likely that the Federal Government will run out of funding without the expected Congressional debt extension. That would shut down the Government. Exactly when that might occur is unclear, but it gets serious starting this week in Washington. Something to watch closely.
Also in the US, a rise in consumer prices in December and solid growth in retail sales which were up +5.4% in a year bolstered expectations that inflation is firming after a long run of softness. The CPI increases were their largest increase in 11 months on strong gains in the cost of rental accommodation and healthcare. Analysts suggested this is the start of an accelerated inflation track.
China’s exports and imports both increased for the first time in three years in 2017, but trade tensions with the US and cooling domestic demand are clouding prospects this year. Their trade surplus shrank -14.2% in 2017 following a -9.1% reduction in 2016. China's exports increased +7.9%, the fastest growth since 2011, but imports surged +15.9%, also the strongest rise since 2011. But China reported its largest-ever annual trade surplus with the US which is sure to raise tensions, especially as it is a stronger American economy that is partly driving the changes.
And China also noted that New Zealand has exceeded its cheese shipments to the country more than what is provided for in our free trade deal. So MFN duties are now applying.
Staying in China, one regional area there has had to revise its GDP numbers because of "different mathematics". It is part of a crackdown on dodgy data. In this case the GDP reduction for 2016 was -33.4% and in 2017 they will report growth of just +2.8%.
In India, PwC has been debarred from auditing any listed company following its failure to detect fraud at one of them in 2009. The move may result in major losses for the firm in the country.
Commodity demand is in the ascendancy these days with prices rising across the board especially for 'hards'. Of special note are the rising prices for aluminium and zinc.
In Germany, Angela Merkel looks like she has the basis of a deal with a left-leaning party to form a grand coalition government. Remember, Germany had an MMP election on the same weekend we did; coalition negotiations there have taken much longer.
The UST 10yr yield is unchanged at 2.55% today. However, the UST 2yr yield jumped above 2%, a key psychological level last seen almost ten years ago. And in China, the equivalent 10yr sovereign bond has jumped to 4.03% (+7 bp) its highest since September 2014, while the equivalent NZ 10yr sovereign bond is unchanged at 2.87%.
Oil prices are a little higher today with the WTI benchmark now just under US$65 a barrel, while the Brent benchmark is just under US$70.
Gold however is up strongly, up +US$16 to US$1,333/oz.
The Kiwi dollar is unchanged this morning at just on 72.5 USc. On the cross rates it is at 91.6 AUc, and against the euro it's at 59.4 euro cents. That puts the TWI-5 at 74.1.
Bitcoin has slipped again over the past 24 hours, by -US$250 this time to US$13,288, a -1.9% decline. Meanwhile, a key US trading platform has had issues. It is trading again however after frustrating many users. Also recall that last week South Korea said it is getting ready to ban trading in cryptocurrencies. And Indonesia is warning cryptocurrencies are illegal there.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».