Here's our summary of key events over the weekend that affect New Zealand, with news investor concerns about how much damage the US can do to China or the world on trade seem to be fading.
But first, a report for the Bank for International Settlements said decades of falling interest rates have led to a sharp increase in the number of “zombie” firms world-wide, potentially threatening economic growth and preventing interest rates from rising.
Another report has said that China has cancelled trade talks with the US after the US imposed its latest round of tariff increases. It's a move that was not unexpected. Kevin Rudd has released a useful review of where things may go from here and he doesn't expect a resolution any time soon.
And it looks like China will win its anti-dumping case against the US at the WTO.
Still no NAFTA progress, although Mexico has said it will do a deal directly with Canada if Canada can't agree with the US.
But despite all this uncertainty, at the end of last week world shares hit a more than six-month high. Shanghai was up a remarkable +2.5%, and Hong Kong was up +1.7%. Other exchanges showed similar enthusiasm. On Saturday (NZT), the S&P500 recorded no gain and the NASDAQ actually fell.
Early data for the US September PMIs shows another pullback in their expansion with the composite index falling to a 17 month low. The same data shows prices rising faster.
Canada’s overall inflation rate eased for the first time in four months to +2.8% in August, but another uptick in core measures of inflation suggest that further Bank of Canada interest-rate increases remain on track.
The Brexit re-negotiations are going badly for the UK, with the UK wanting a deal the EU won't actually even consider. The chances of a hard Brexit are rising.
In Australia, ratings agency S&P has upgraded their AAA rating from negative to stable. A multibillion-dollar boost to income taxes on the back of bracket creep and high migration levels, and company tax receipts, through higher company profits, have allowed the government to bring forward its expectations of a budget surplus to 2019-20.
On this side of the ditch, ratings agency Moody's has affirmed the NZ Government Aaa rating. The outlook remains Stable. S&P and Fitch both rate the New Zealand Government as AA+ Stable, one notch lower than Moody's.
The UST 10yr will start the week at 3.07% and their 2-10 curve will start at +26 bps. The Aussie Govt 10yr is at 2.70% the China Govt 10yr is at 3.71%, while the NZ Govt 10 yr is at 2.70%.
Gold hasn't been able to hold its recent gains and has slipped back to US$1,199/oz in New York, but almost the same level as this time last week.
US oil prices are little changed today from yesterday and now just under US$71/bbl. The Brent benchmark is now just under US$79/bbl. A call by the US Government for its 'friends' in OPEC to cut prices has fallen of deaf ears.
The Kiwi dollar is starting the week firmer at 66.7 USc and up much more than +1c from this time last week. On the cross rates we are marginally firmer at 91.8 AUc, and at 56.8 euro cents. That puts the TWI-5 at 70.3 and almost at its average over the past 3 months.
Bitcoin is now at US$6,688 and little changed over the past few days. This rate is charted in the exchange rate set below.
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The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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