Here's our summary of key events over the weekend that affect New Zealand, with news on trade.
First, the trade tension between the US and China seems to be fading - at least until the next Presidential tweet. The Chinese appear to have agreed to some vague plan to "increase imports from the US", and a senior American official said they are putting 'on hold' their tariff penalty plan. However, it doesn't appear that China accepted the US specific demands. More 'consultations' are planned. When Wall Street opens tomorrow, it is likely to get a boost from this development.
These moves come after a tough turn in Congress on Saturday. The Republican measures to soften the impact on their farm sector couldn't get the votes in the House to pass, based on the enormous deficit-raising cost. Bit of an own-goal here as the party who started the current trade war has been unable to shield itself from its local impacts.
Then China abruptly ended an anti-dumping probe into imported American sorghum.
Domestically, US home mortgage rates have now hit a seven year high. The average 30 year fixed rate mortgage is now at 4.61%. A standard variable rate mortgage is now at 3.77%. These represent a +5 or +6 bps rise in just one week. Rising rates have traditionally held back their real estate markets, for both new builds and resales. Americans owe US$15 tln for housing loans, so a 1 bps rise adds US$1.5 bln to their payment load per year. In the past week that has risen by US$7.5 bln pa.
In Canada, their CPI inflation rose at the rate of +2.2% in the year to April. That is down from +2.3% in the year to March. Meanwhile Canadian retail sales rose much more strongly than expected, but that was only due to surging car sales. Otherwise they slipped unexpectedly. This is the third straight month Canadian inflation has been higher than the Bank of Canada target.
Meanwhile, the EU trade balance came in almost exactly where analysts had forecast, but that doesn't hide the surge in trade for both imports and exports which is really quite impressive. Their large surplus with the US swelled. Their deficit with China, which is even larger, grew as well. Overall, their surplus shrank a small amount.
And the EU is moving to try to protect its companies from fallout from the US's unilateral reimposition of sanctions on Iran.
The UST 10yr yield is now at 3.06% and -5 down from this time on Friday. The Chinese 10yr is up to 3.72% (-3 bps) while the New Zealand equivalent is at 2.89% (up +1 bp).
Gold markets are now closed, ending at US$1,292/oz in New York. That is basically unchanged.
Oil prices are down a little and are now just under US$71.50 and the Brent benchmark is now just on US$78.50/bbl. The US rig count was stable this past week after six straight weeks of gains.
The Kiwi dollar will start the week lower at 69 USc as early trading is seeing the greenback rise. On the cross rates we are down at 91.9 AUc and 58.7 euro cents. That puts the TWI-5 at just on 72.
Bitcoin is now at US$8,516 and little changed from where we left it on Saturday.
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