Here's our summary of key events overnight that affect New Zealand, with news the emerging market wobbles just got worse.
But first, American consumer spending increased solidly in July, suggesting good economic growth early in the third quarter, while the Fed's preferred measure of underlying inflation hit their 2% target for the third time this year. But Wall Street is taking fright, both with new shots in the trade war fired by the US Administration, and escalating emerging market woes. The S&P500 is down -0.6%, most of the fall in the past hour.
Canadian economic growth jumped to an annual rate of +2.9% in the June quarter, a sizable jump from the March quarter, and the two quarters prior to that. But the rise was expected; in fact it missed analysts estimates of +3.0% by a whisker. The jump was essentially driven by a much better export performance.
EU economic confidence is slipping, although it has to be noted, from a relatively high level. Consumer confidence is down and rather sharply, and so is business sentiment, which is seeing slowing order growth.
There was data released overnight in Germany as well, but few surprises. Inflation is holding at +2.0%, which employment is growing at the rate of +1.3% pa, similar to recent months, and slightly faster than the growth in their working aged population.
July global air passenger traffic was up solidly, gaining +6.2% year-on-year as the northern hemisphere vacation season got underway. But the strongest growth was in domestic travel, especially in China and India. International travel grew +5.3%, although the Asia/Pacific region posted much more impressive +7.5% growth rates.
But the crisis in Argentina got a lot worse overnight. Their currency came under fresh attack, the Government pleaded for the IMF to release funds early, and their central bank raised their interest rate from 45% to 60% and said it wasn't coming down for the rest of 2018. Other emerging market currencies like those of Turkey, Indonesia, Brazil and India have also been hit.
In China, housing rent increases are worrying authorities. Shenzhen, the boom city just across the border from Hong Kong, is to try rent control. They plan to cap the annual rise in residential rents at +5%.
And the Chinese-backed regional free trade deal, the RCEP (a TPPA-lite, without those pesky labour and environmental standards) looks like it will get approval by the end of 2018.
And Japan is taking a leaf out of the Aussie security playbook and investigating its risk from allowing China's state-controlled Huawei and ZTE into their telecommunications infrastructure.
The UST 10yr was unchanged at 2.88% and the 2-10 curve is now at +21 bps. But it has slipped to 2.86% for the same reasons Wall Street is retreating. The Aussie Govt 10yr is at 2.55% (unchanged), the China Govt 10yr is at 3.64%, up +1 bp, while the NZ Govt 10 yr is at 2.58%, down a chunky -6 bps. Yesterday's business confidence slump did that.
Gold is lower today, down -US$6 at just on US$1,199/oz in New York.
US oil prices are up sharply again today, now just under US$70.50/bbl. And the Brent benchmark is now just under US$78/bbl.
The Kiwi dollar lost -½c yesterday on the slumping business confidence data and has stayed down overnight at 66.4 USc. On the cross rates we are softer at 91.4 AUc, and at 56.9 euro cents (which is actually the lowest it has been in three years). That puts the TWI-5 at 70 and back to where it was two weeks ago.
Bitcoin is at US$6,856 and -2.3% lower than this time yesterday. This price is tracked in the exchange rate 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 ».
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