Here's our summary of key events overnight that affect New Zealand, with news the indications are that global trade is slowing.
Firstly, there appears to be a full renewal of the NAFTA trade deal. The changes seem minor - most interest is in what hasn't changed, and that is most of it. All parties are claiming 'victory', but Mexico and Canada seem to have only given up a few things at the fringes while retaining Chapter 19 and Chapter 20 protections, as well as insulating themselves from wider US tariff 'punishments'. The 'gains' the US made in dairy access are apparently no more than what Canada had already agreed to in the TPPA talks. Duty-and-GST free access by US online retailers has been expanded by a few dollars, but the US is calling that 'major'. Basically what the US gained is being described as 'rounding error'.
The PMIs for the US in September remain strong, although are being pegged back a bit. The ISM one fell -1.5% and the new orders component fell -3.3%. These falls would have been called 'sharp' had they not already been at an elevated level. The Markit one ticked up to a four month high, although not as positive as the ISM one. Both are recording sharp rises in input costs. Both record concerns about trade.
US construction spending rose marginally in August but only because of public sector projects. It surprised analysts that private sector construction actually fell from July. Still, it is +4.4% above the same level a year ago.
Canada's PMIs were weak in September. The Markit one shows expansion dropped sharply, while the RBC one also showed the same thing.
The Mexico PMI expanded faster on rising new orders, and especially new export sales.
Global airfreight demand rose +2.3% year-on-year in August, a rate of increase less than half that of a year ago. In the Asia/Pacific region, the rise was only +1.6%. Airlines are noting that trade invetories are rising which caps freight demand.
The IMF is warning of the risks of global trade 'drift' by policy makers in the face of rising protectionism.
The situation is much more positive for passenger travel which is up +6.4% on the same basis. Asia-Pacific international traffic growth is up +7.5%, but the real stars are doimestic travel growth in both India and China.
In Australia, both the RBA and Treasury are separately warning their Government about the consequences of adopting the likely Hayne Report recommendations. A credit crunch which tips the country into recession is one potential outcome.
The UST 10yr yield is up +1 bp at 3.08%. Their 2-10 curve is now under +25 bps. The Aussie Govt 10yr is at 2.68% (up +2 bps), the China Govt 10yr is at 3.66% (unchanged due to the holiday week there), while the NZ Govt 10 yr is at 2.64%, and also unchanged.
Gold is down -US$3, now at US$1,189/oz in New York.
US oil prices are up strongly today by more than +US$1 and now just over US$75/bbl. The Brent benchmark is now just under US$85/bbl.
The Kiwi dollar is starting today little changed at 66.2 USc. On the cross rates we are also little changed at 91.6 AUc, and at 57.2 euro cents. That leaves the TWI-5 at 70.2.
Bitcoin is now at US$6,563 and and a dip of less than -1% since this time yesterday. This rate is charted in the exchange rate set below.
This chart is animated here.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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