Fonterra avoids credit rating downgrade - just; Markets get jittery as Donald Trump cancels meeting with Kim Jong Un; US home sales fall in April; UST 10yr at 2.98%; oil and gold down; NZ$1 = 69.3 USc; TWI-5 = 72.1

Here's our summary of key events overnight that affect New Zealand.

US President Donald Trump has abruptly called off his June 12 meeting with North Korean leader Kim Jong Un. Citing “tremendous anger and open hostility” by the North, Trump’s call follows threats by the North to withdraw from the summit. It also follows the North tearing down an underground nuclear testing facility.

Equity markets were down on the news, but have since bounced back a bit. Safe haven assets have benefited. ANZ economists maintain geopolitics is likely to remain a focus for markets – not only because of the US’s spat with North Korea, but also due to trade tensions with China.

Fonterra has only just retained its Stable A- credit rating further to it downgrading its expected earnings for the year to July 31. With the cooperative exceeding its debt threshold, S&P says it has “very limited headroom within the current rating”. Nonetheless, the credit rating agency says Fonterra has a number of levers to manage debt; the group reducing its dividend payout and not increasing its advance rate for higher milk prices.

Data out of the US shows year-on-year home sales fell by 1.4% in April. They were also down compared to March. Median house prices were up 5.3% compared to April last year. Properties typically stayed on the market for 26 days, down from 29 days a year ago. 

Mark Carney has signalled the Bank of England would be prepared to cut interest rates - or freeze plans to increase them - to support job and economic growth should Britain be plunged into a disorderly Brexit. The Governor says the banks is ready to respond to Brexit in “whatever form it takes”.

The UST 10yr yield has fallen another 4bps overnight to 2.98%.

The US crude oil price has dropped to US$71/bbl. The Brent benchmark is down to US$79/bbl.

Gold has fallen to US$1,289/oz.

Currency markets have again been quiet. The New Zealand dollar is pretty stable at 69.3 USc, 91.5 AUc and 59.1 euro cents. The TWI-5 is at 72.1.

Bitcoin has regain some ground. It's up to US$7,600.

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7 Comments

Trump can say, I the most powerful leader of the most powerful nation ever known to mankind, was prepared, with alacrity, to bend the olive branch, and in the interests of global peace, and to offer an impoverished, entrapped people a chance to come into the light, meet with a tin pot despot. Despite all my magniloquence and magnanimity, I have been given the fingers. If there ever was a perfect role for Peter Sellars, this is it. But it might yet work. Probably will.

Eventually.... he took that case to the Ombudsman. The (Ombudsman) found the bank was entitled to hang on to the $100,000 but it was not fair to do so.

From The Royal Commission in Aussie, yesterday. Wonderful things those Ombudsman's' offices! Translation: "Banks - can do whatever they want and there's nothing you can do about it!"
http://www.afr.com/business/banking-and-finance/rowena-orr-returns-with-...
" ...but he also refused to accept what looks like unjust treatment. How many others are able to stand up to a bank in this way?"

Breakfast !

Yes, according to Jenee the Bank if England is ready to react to a disorderly breakfast. I’m glad to hear they are preparing for these types of senarrios :)

A disorderly breakfast would be a catastrophe! Thanks for listening to what was on my mind this morning team :)

Its okay , you are doing a great job , we all make little errors sometimes , hope you had a good breakfast !

Loved it Jenée! If its an consolation youre in good company: https://www.youtube.com/watch?v=GK16L2bB4Fo