Here's our summary of key events overnight that affect New Zealand, with news the American Federal budget deficit got sharply worse in August.
But first, consumer CPI inflation in the US slipped slightly, and came in a little lower than expected at 2.7% pa for August. It was 2.9% in July. It is being held up by petrol and rents, and held back by food. Interestingly, medical care services are rising slower than the average at +1.9% pa. (By comparison, the New Zealand "hospital services" component in our CPI series - the bit patients pay for - rose +2.2% pa in the year to June.)
That slip in inflation allowed American "real earnings" to rise in August, but the gain is only +0.2% over the whole year, Yes, wages are going up, but inflation is keeping pace.
The American Federal budget got much worse in August, even more so than the expected deterioration. It came in at a deficit of -US$214 bln for the month (!) taking the 11 month year-to-date total to just on -US$900 bln, a level it will probably end up for their full fiscal year to September and racing up closer to GFC-level deficits (which reached -US$1.4 tln
bln in 2009). The 2018 deficit will be -4.5% of GDP. The Americans certainly aren't repairing the roof while the weather is 'fine'. And at this new level, they are about -$100 bln worse that the CBO estimated in June. No-one could say this deficit track is responsible management of public finances.
The ECB rate decision brought no changes and no surprises. This is the last month of their €30 bln of bond buying. From October it steps down to €15 bln/month as previously announced. One thing the EBC did do however, is it lowered its growth forecasts on trade war fears.
There were no changes and no surprises at the Bank of England rate review either. And overnight Turkey also reviewed its rates in the middle of its currency crisis and decided to raise them by a massive +6.25% to 24%. Their strongman president is not happy, but markets are, as the Turkish lira immediately rose in value.
Today, the UST 10yr yield is marginally lower at 2.97% and their 2-10 curve is tighter at just +20 bps. The Aussie Govt 10yr is at 2.60% (up +1 bp), the China Govt 10yr is at 3.68% and down -2 bps, while the NZ Govt 10 yr is down at 2.57%, -5 bps lower.
Gold is lower today, down -US$7 at US$1,201/oz in New York.
US oil prices are down as sharply today as they rose yesterday. They are down about -US$1.50/bbl and now just over US$68.50/bbl. The Brent benchmark is also lower, now just under US$78.50/bbl. The weakening of the US storm and the shifting of its track might have something to do with the pullback on prices.
The Kiwi dollar is starting today marginally firmer at 65.7 USc. On the cross rates we are at 91.3 AUc, and at 56.2 euro cents. That puts the TWI-5 at 69.3.
Bitcoin is firmer at US$6,491 which is +3.4% higher than this time yesterday. This price is tracked in the currency charts 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 ».