Here's our summary of key events overnight that affect New Zealand, with news bond investors are taking a huge hit.
Wall Street is lower yet again, with the S&P500 down -0.7% at one point earlier to open their week. This follows a -3.7% drop in Shanghai as their markets returned from holiday.
China's weekend reserve ratio cut, and it was a big one, just reinforced how worried Beijing policy makers are about the immediate prospects in the Chinese economy. China can roll out its "home team" of SOE's to soak up sharemarket buyer flight, but reports are that it was foreign holders who were the sellers - investors essentially taking advantage of that policy in near-record selling. Additional liquidity, and "the home team" can do a lot for a while, but it actually can't change sentiment. And where they are not active, things can get ugly, such as in their fast-cooling (that is, falling) property markets. But don't expect to see that in their official stats, at least not confidence-sapping data.
But away from finance and money issues, most of the Chinese middle classes are feeling confident. Local travelers made 726 million trips during the Golden Week holiday that ended Sunday, up 9.4% from a year before. The slowing economy clearly failed to dent demand for travel. Or online shopping either, it seems.
China may be being hit by the tariff war, and that impact is being felt elsewhere. But other main markets are also being hit by interest rate risk. Sharply higher benchmark rates is seeing corporate, and especially sub-investment grade debt riser in yield even faster. That means big losses for their holders. One estimate is this latest rate spike has wiped almost US$1 tln off the value of such holdings. The bond market may be huge, but even there a US$1 tln loss is noticed by everyone.
In Italy, jibes between the new Italian government and the EU over the EU budget rules are unsettling markets again, just after things seemed to cool. This is not helping EU bond yields either.
In Sweden, the 2018 Nobel Prize in economics has been awarded to two Americans, William D. Nordhaus and Paul M. Romer for including climate change and technological innovation in long term economic theory, and furthering research on sustainable growth.
In Switzerland, the UN IPCC issued another shrill Report on climate change - one that seems widely ignored again despite its warning of impending disaster. The issues are serious, but completely disconnected from general public interest. Disappointingly, this is science that is being rejected as a partisan overreach by people making money off it. It deserves better.
The UST 10yr yield is unchanged today 3.23%s. Their 2-10 curve is still at +34 bps. The Aussie Govt 10yr is at 2.77% and up +7 bps from this time yesterday. The China 10yr is at 3.63%, down -4 bps, which the NZ Govt 10yr is at 2.67%, up +4 bps.
Gold will start at US$1,185/oz a sharp US$18 drop overnight.
US oil prices are little changed today at just over US$74/bbl. The Brent benchmark is now just over US$84/bbl.
The Kiwi dollar is starting today at 64.5 USc having changed little since this time yesterday. On the cross rates we are at 91.2 AUc and at 56.2 euro cents. That puts the TWI-5 at 68.7 and still at a three year low.
Bitcoin is now at US$6,623 and that is a tiny net gain of less than +1% overnight. 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 ».
We welcome your comments below. If you are not already registered, please register to comment
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.