Here's our summary of key events overnight that affect New Zealand, with news concerns of a trade slowdown are starting to be felt.
The US Fed's latest Beige Book update shows that manufacturers across the country expressed concern about tariffs, with many reporting higher prices and supply-chain disruptions in the wake of new trade policies. In the report 10 of the 12 Federal Reserve Districts reporting moderate or modest growth. The outliers were the Dallas District, which reported strong growth driven in part by the energy sector, and the St. Louis District where growth was described as slight.
Those factory concerns are small compared to the ones in the residential construction industry. Housing starts fell sharply in June, down more than -12 % from May, and more than -4% lower than in June 2017. There doesn't seem to be any relief coming either; building permits slid as well. A rise was expected, what they got was a level lower than the same month a year ago.
In Europe, their competition agency has fined Google almost NZ$7.5 bln for the way it launched its Android mobile system. At the core, because it gave it away free and it only used Google Search, it is guilty of market dominance. Other successful 'free' models are sure to fall foul of EU rules too. How effective the EU move is will be determined by how Google's competitors react - and the main ones who can take advantage are both American - Amazon, and Microsoft.
Aircraft maker Boeing lifted its long-term forecast for commercial aircraft as rising passenger traffic and upcoming airplane retirements drive the need for more than 42,000 new jets – valued at NZ$9.3 tln – over the next 20 years. The global airplane fleet will also sustain growing demand for commercial aviation services, leading to a total market opportunity of $22 tln they say.
In Britain, a new report suggests that a hard Brexit may drive up the cost of everyday family purchases sharply and dairy products were one item singled out. That in turn could create a surprising opportunity for New Zealand.
In Australia, regulator APRA has told their Royal Commission that banks do have a right to make a profit and take enforcement action when borrowers can't repay loans. The regulator said this was important so that depositor positions were not compromised.
The UST 10yr yield is rising and now at 2.88%, up +2 bps. Their 2-10 curve has moved higher today as well. The Chinese 10yr is at 3.50% (unchanged) while the New Zealand equivalent is now at 2.90%, down -1 bp.
Gold is marginally lower again at at just on US$1,227/oz in New York. It actually closed in London at US$1,224/oz.
US oil prices are a little higher and now just under US$69/bbl. The Brent benchmark is now just under US$73/bbl.
The Kiwi dollar is starting today noticeably firmer at 68 USc. On the cross rates however we are holding at 91.8 AUc, and at 58.4 euro cents. That puts the TWI-5 up to 71.6.
Bitcoin is holding at its higher level and is now at US$7,404 which is a little less than a +1% gain from this time yesterday.
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