Here's our summary of key events overnight that affect New Zealand, with news the New Zealand dollar is now at a three year low.
The overnight dairy auction brought lower prices again, this time down by -0.7% and the fourth consecutive decline. Prices in USD are now down -18% since March, and down -10% since this time last year. But the exchange rate has fallen as well, so in New Zealand dollars, todays prices are actually up +1.5% from the previous auction. The dominant WMP product was down -2.2% in US dollars, but five of the other seven products actually achieved higher USD prices. Despite that, today's event will do nothing to reverse the downward trend in farmgate milk payout forecasts.
In the US, manufacturing activity either rose to more than a 14-year high in August in one report, boosted by a surge in new orders, or fell to a nine month low in another survey. But both see future rises and warn of rising supply chain stresses and new import tariffs have yet to bite. In construction, spending was up +5.8% year-on-year. Analysts see rising short-term growth ahead.
American car sales rose about +1% in the year to August, but the SUV market was very strong. This year's rise follows a -2% fall last year. Analysts expect car sales to plateau in the balance of 2018.
Inflation in the OECD area pushed up to +2.9% in July, pressed higher by rising energy costs. Underlying inflation also rose but is running at 2.1%.
Yesterday Chinese shares rose sharply after a subdued morning, amid speculation investors are buying companies seen as oversold. Financial and technology companies led the advance. That resulted in gains of more than +1% in both Shanghai and Hong Kong. But these gains haven't been reflected on Wall Street this morning where prices are lower in afternoon trade. This is despite the news that Amazon has now joined Apple as a US$1 tln listed company.
In Indonesia, their central bank has spent an eye-popping NZ$0.75 bln tln over the past few days defending their currency.
In China, consumer spending is rising at 'normal' levels, but due to restrictions in other areas, consumer borrowing is rising much faster. No one seems to know where that extra spending power is going and authorities are increasingly concerned it is being used to back-door other regulations designed to cool excesses. Propery investment and online investment may be where it is getting channeled. A bit like their peer-2-peer lending debacle, another painful crisis may be in the making.
Ratings agency Moody's says the outlook for the global reinsurance sector over the next 12 to 18 months remains stable on the back of strong balance sheets. They also note that climate change issues are a rising risk for them however.
In Australia, the Federal government is to propose a range of tax cuts for business.
The UST 10yr is up to 2.90% and their 2-10 curve is wider at +24 bps after the US holiday. The Aussie Govt 10yr is at 2.52% (unchanged), the China Govt 10yr is at 3.63% and up +2 bps, while the NZ Govt 10 yr is at 2.54%, down -1 bp.
Gold is down almost -US$10 at US$1,192/oz.
US oil prices are softer today and now just under US$69.50/bbl. The Brent benchmark is now just under US$78/bbl.
The Kiwi dollar is now at 65.5 USc and that is its lowest level since February 2016. On the cross rates we are lower at 91.3 AUc, and softer at 56.6 euro cents. That puts the TWI-5 at 69.5 and that's now a three year low.
Bitcoin is now at US$7,388 and +1.6% higher 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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