Here's our summary of key events overnight that affect New Zealand, with news emerging economies are struggling to handle the fallout of a new chaotic trade environment.
Firstly, it looks like China has had a small blink in its trade tussle with the US. Omitted from its tariff retaliation was American crude oil, although sourcing that still will help keep prices down from other places - like Iran, where volume are rising.
In the first world, Canadian housing starts fell sharply in June, consistent with yesterday's weak building permit data.
Japanese machine tool orders rose more than expected in July, up by +13% and far better than its +11.4% rise in June.
Beijing is using the Shanghai markets to drive down interest rates. Overnight Shibor, a measure of the shortest-term bank lending rates, fell to 1.42% yesterday, its lowest since 2015. It ended the day a little higher however. This is a mechanism their Government is using to try to stimulate the economy by ensuring lenders have plenty of cheap funding to support businesses and consumers during the uncertainty of the trade war.
The central bank of the Philippines raised its official rate by its most in more than a decade, adding +50 bps to take it to 4.0%. They are battling fast-rising inflation which is now just under +6% and the rate hike comes despite growth falling below expectations.
Yesterday we reported a slowdown in the growth of air cargo traffic. Today we can report that international passenger traffic growth seems to be rising faster. Worldwide, passenger traffic was up +7.7% in June year-on-year. In the Asia-Pacific region it was up +9.5%. Both of these rates are faster than we have reported previously in 2018.
In the sea trade, shipping group Maersk said 94 companies and organizations have so far joined a blockchain platform developed with IBM aimed at boosting efficiency and limiting the enormous paper trail of global container shipping. This is one of the largest rollouts of blockchain technology in the world.
Meanwhile in some key emerging markets, new sanctions drove down Russia's ruble, while worries that Turkey was sliding into a full-blown economic crisis battered their currency. The Argentine and South African currencies were also hit hard.
The UST 10yr yield is down sharply at 2.93%, a -4 bps fall in a day. Their 2-10 curve has slipped to +28 bps. This is despite the US Treasury saying it will sell an eye-popping US$122 bln in new debt next week, taking total US Federal debt held by the public to US$15.6 tln, or 78% of US GDP. The Chinese 10yr is at 3.56% (up +3 bps) while the New Zealand equivalent is now just over 2.71%, down a very substantial -7 bps. And as we reported last night, New Zealand swap rates took a heavy dive yesterday, down about -10 bps across most of the curve.
Gold is little changed, today down -US$1 to US$1,212/oz.
US oil prices have stopped falling and are now still just under US$67/bbl. The Brent benchmark is now just over US$72/bbl. We should also note that Saudi Arabia's attempt to punish Canada over their fury for a perceived cultural slight is having zero impact. A trade war skirmish that failed.
The Kiwi dollar is starting today very much weaker having been dumped on after yesterday's RBNZ MPS and the Fonterra trading halt. It is now just at 66.3 USc and more than -1c lower. On the cross rates we are also very much weaker at 89.7 AUc, and at 57.3 euro cents. That puts the TWI-5 at 69.9 and under 70 for the first time in nearly three years.
Bitcoin is now at US$6.464 and +3.3% higher than this time yesterday. We track this rate daily in the interactive chart below.
This chart is animated here. For previous users, the animation process has been updated and works better now.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».