Here's our summary of key events overnight that affect New Zealand, with news that the global bond rally is rattling markets.
Firstly, American consumer confidence has come in a tick higher than expected in January. Markets took that as meaning the US Fed is more likely to raise its Fed Funds rate at a quicker pace and bond yields firmed putting downward pressure on bond prices. Equities sagged because of that and are down more than -1% on Wall Street.
Meanwhile the American home ownership rate rose to 64.2% in 2017 and this is the first time in 13 years it has turned up. The evidence is that young households overcame the price hurdles to purchase homes in growing numbers. (The New Zealand home ownership rate is 62.8%.)
In China, troubled conglomerate HNA is said to be facing a cash crunch of as much as NZ$3.3 bln before the end of March. The company claims all is well but creditor banks are banding together to protect their interests. It is never a good sign when banks co-operate like this on a credit risk.
The 2017 Eurozone economic growth rose to +2.5%, its fastest pace for a decade in 2017. Growth in France gave it a push. That compares to US growth of +2.3% on the same full-year basis. New Zealand economic growth figures won't be released until late March but are expected to be about +2.7% (although that will be sharply lower than +4.1% real growth we had in 2016).
Strong and sustained rises in both consumer and business confidence is building positive EU sentiment at levels not seen in a decade. Matching the heady days of 2000 actually isn't too far away. And all this is being achieved with low inflation. Germany reported it at +1.6% in January, a tick lower than expected.
In Australia, just a day after appointing an internal candidate to the CEO role, regulator ASIC has hit Commonwealth Bank of Australia with a new court action related to 2012 claims of rigging their swap rates. (Australia has subsequently changed the way the BBSW is set.)
Standard & Poor's have affirmed the New Zealand credit rating at AA Stable. They say this because they expect "fiscal performance will remain sound with a slowly improving net debt ratio during the next few years". They also say an upgrade is likely if the Government's budget performance continues to improve "in a sustained way". However a downgrade is possible they warn, if that falters, or if the country's "debt profile, or banking metrics weakened substantially". New Zealand's AA Stable rating is two notches lower than Australia's AAA, although they have a Negative outlook.
The UST 10yr yield is still firming and is now at 2.73%, a gain of +3 bps in the last 24 hours. The equivalent 10yr China sovereign bond is down just a little at 3.95% (-1 bp). The equivalent NZ 10yr sovereign bond is up +1 bp to 2.96%.
Oil prices are down more than -US$1 today and currently just under US$64.50 a barrel, while the Brent benchmark is now under US$69.
Gold is also down by another -US$1 and now at US$1,340/oz.
The Kiwi dollar starts today higher however at 73.3 USc. On the cross rates there are also small rises and we are now at 90.8 AUc, and against the euro at 59.2 euro cents. That puts the TWI-5 just on 74.
Bitcoin is now just on US$10,000 or -10.5% lower than this time yesterday, and a drop of -US$1,250. In fact, the current level is the lowest we have seen the bitcoin price since late November and at one point in the past hour it was below US$10,000.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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