Powell flags more rate rises; progress on NAFTA, but none with China; global trade growth stalls; steep hikes coming for marine insurance; UST 10yr at 2.82%, 2-10 curve slumps; oil and gold up; NZ$1 = 66.8 USc; TWI-5 = 70.5

Here's our summary of key events over the weekend that affect New Zealand, with news the US Fed is staying the course of bringing interest rates back up to 'normal' levels.

In Jackson Hole, a key speech by the US Fed chairman is marking him out as more 'data driven' than 'economics driven'. He is saying gradual interest rate hikes were the best way to protect the American economic recovery. And he said more rate hikes are likely, over and above the two already penciled in for later in 2018. He also said he sees few signs of overheating. This was a direct pushback against the comments of the US President, and equity markets liked it, although the bond market not so much.

In weekend data releases, American durable goods orders fell -1.7% in July from June and a much bigger fall than markets were expecting. But they were up +8.6% above the same month a year ago.

In Washington, trade talks between the US and China failed to produce any visible sign of progress, reducing the prospects of a deal soon. Meanwhile in China, authorities are trying to stop the yuan falling too fast so as to curb any prospect of capital flight.

China is also worried about the rise of Scott Morrison as Prime Minister of Australia, fingering him as an anti-Chinese influence. One of Morrison's recent moves was to block Chinese firm Huawei from construction their G5 network and Canada may also be considering doing the same.

More progress is being made on the NAFTA front with the US reportedly compromising with Mexico on the important 'sunset' clause issue. Expectations are that the US-Mexico talks will be completed in a few days, and then Canada will rejoin to resolve its issues. Observers now expect a formal completion sometime in September.

Mexican GDP fell in the June quarter, also by more than markets were expecting. It was down -0.2% from the first quarter, but up +2.6% from the same quarter a year ago.

And, overall global trade volumes were flat in the three months through June, ending two years of steady growth. Among the causes were slumping Asian semiconductor demand and fallout from the US-China trade war.

In the international marine insurance market, insurers are moving to raise premiums sharply. That move will impact sea freight rates from and to New Zealand.

The UST 10yr is at 2.82% but their UST 2 yr is up firmly and that has put their 2-10 curve under +20 bps for the first time since July 2007. In fact, its under +19 bps. Given it was at +26 bps at the start of the week, this is a fast, sharp move and not a welcome one. We have more on this shift here. The Aussie Govt 10yr is at 2.54% (unchanged), the China Govt 10yr is at 3.64% and down -2 bps, while the NZ Govt 10 yr is at 2.60%, unchanged.

Gold has had a good move up, this time by +US$20 from yesterday and is now just on US$1,205/oz in New York.

US oil prices are starting the week firmly higher, now over US$68.50/bbl. And the Brent benchmark is well over US$75.50/bbl. The US rig count dropped sharply off its recent high.

The Kiwi dollar is also a little firmer at 66.8 USc. On the cross rates we are now at 91.2 AUc, and at 57.4 euro cents. That puts the TWI-5 at 70.5 and comfortably above its recent three year lows.

Bitcoin is at US$6,665 and +2.0% higher for the week. It is just about to touch NZ$10,000 again after a period of three weeks below that level.

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