US sentiment slips; Fed policy concerns; China surprises with trade deficit; China loans grow slower; seafreight rates to rise; brokers clash with AU banks; ASX bars China listings; UST 10yr 2.82%; oil and gold up; NZ$1 = 73.5 USc; TWI-5 = 74.6

Here's our summary of key events overnight that affect New Zealand, with news the Aussies have had enough of Mainland Chinese companies listing on the ASX.

But first in the US, politics is hurting consumer sentiment. The University of Michigan’s consumer sentiment index fell in April to a reading of 97.8, down from 101.4 in March. Analysts expected a reading of 101 so this is a noted drop. Getting the blame were fears of a trade war, and fears of rising interest rates.

And a US Fed board member has expressed concern over the growing fiscal deficits, saying recently passed tax cuts and spending increases are raising risks that authorities won’t have a full tool kit to counter the next downturn.

The irony story of the day is from Apple. They sent a confidential warning to staff about leaking company information to the media. We know this because that memo itself was leaked. The essence of the memo is that the company wants to control its messaging.

In China, they reported a surprising trade deficit of nearly nearly US$5 bln in March, a turnaround from a surplus of US$33.5 bln in February. This is the first monthly deficit since February 2017. China’s inbound goods shipments rose +14% year-on-year in March, while its exports dropped -3%.

And the crackdown on shadow banking is weighing on credit growth in China. That adds to uncertainties facing the economy such as intensifying trade tension with the US. Data out overnight shows that Chinese banks extended ¥1.12 tln in net new yuan loans in March, and under analysts’ expectations. But that is an improvement from February’s much weaker-than-expected ¥839.3 bln.

Freight rates are set to rise for New Zealand as a result of climate change policies adopted overnight. Slow steaming by ships is one of the outcomes from the new global agreement. New ship technologies required will also had billions to ship owners costs. All this will add up to higher freight rates for countries far away from markets.

In Australia, the big banks are signaling they are sick of being suckered into reputational issues by a wide-boy mortgage broking industry who push the credit standard margins. ANZ is the latest to clamp down. Westpac has already signaled a fee-for-service model is their preference where brokers charge clients directly a fixed rate rather than take commissions off banks. But the broking industry is furious that they are being painted as the bad guys and are pushing back. Given that more than half of all Aussie mortgages are originated by brokers, the stoush is a lose-lose battle for both. What seems certain is that mortgage broking is about to be permanently changed there and that banks will want to deal more directly with people they lend to.

And the ASX has virtually stopped allowing mainland Chinese companies to list on their exchange over concerns of poor transparency and bad corporate governance. This comes after a string of serious issues from such companies. The ASX is even moving to clamp down on those that remain listed, delisting some. Mainland Chinese companies are now seen as cowboys, disrespectful of laws and regulations.

The UST 10yr yield is now down at 2.82% and up +1 bp overnight. The Chinese 10yr is at 3.74% (unchanged) while the New Zealand equivalent is at 2.84% (+3 bps).

The VIX is marginally lower than this time last week and the index is now just over 18 and still elevated. The average index level over the past year is 12. The Fear & Greed index is at "extreme fear" levels but has pulled back from its crisis level of a week ago. Interestingly, it is now at the same level it was a year ago, so the 'fear' conditions are well embedded.

Gold markets have not yet closed but at this time the price is at US$1,345/oz in New York. That is up +US$9 since this time yesterday.

Oil prices have inched ahead overnight and are still just over US$67 and the Brent benchmark just over US$72/bbl. The North American rig count moved even higher this week.

The Kiwi dollar is ending the week up at 73.5 USc on a slipping greenback. On the cross rates we are at 94.7 AUc and 59.6 euro cents. That puts the TWI-5 at 74.6 and still near the top of its 2018 range even if it has slipped back a little overnight.

Bitcoin is however at US$8,089 and up +5.5% in the past 24 hours. That means it is topping NZ$11,000 for the first time in two weeks.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».