Here's our summary of key events over night that affect New Zealand, with news the world's biggest economies are facing enormous challenges.
First in the US, the size and implications of their fast-growing debt problem is revealed in today's Treasury announcement that they will auction US$211 bln in securities next week alone, comprising US$127 bln in new debt and US$84 bln in rollover debt. Yes, that's right one fifth of a trillion in one week.
Across the border, Canada added +28,800 new jobs in September, double the gains reported for August. But almost all were in trucking and delivery jobs, as well as education and healthcare. Factory jobs decreased, a sharp reversal from August.
The Shanghai equity markets were down -3% yesterday in a sharp contrast to most other markets. Shanghai is now down -12% since the beginning of October, down -23% since late May, and down a massive -43% since the start of the year which was its recent high. By any definition this is a full bear market in China and dangerous territory for them. Margin calls and writedowns will be causing real issues, unreported because of their censorship. Clearly the 'home team' has proven useless to stem the red ink.
This drop has unnerved Wall Street, which is also sharply down today, down almost -1.5% in mid afternoon trading.
Japan's trade balance has bounced back to a surplus for the first time in 3 months of about US$1.2 bln in September. Exports were down -1.2% from a year earlier, the first contraction in 22 months. Demand for cars and mobile phone parts was sluggish and restrained by typhoons and earthquakes. Imports were up +7% due to higher crude oil prices.
Back in China, their central and local government fiscal revenues (taxes) grew just +2% year-on-year in September. This drop in the growth of tax collections is a surprising result and may reflect a sharp slowing in commercial activity in the country.
In Australia, consumers are facing higher prices for staples such as bread, chicken and cheese as drought-driven crop shortages, rising fuel prices and the weaker Aussie dollar pushes up production costs.
And economists at AMP Capital have raised their estimate for the housing market peak-to-trough decline to be -20% in Sydney and Melbourne over the next two years. Low auction clearance rates, tighter credit availability, and changed policy around negative gearing from a win by the Labor Party in the next election has seen this decline deepened from their previous estimate of a -15% drop. If they are right, all the gains in the past three years will be erased.
The UST 10yr yield is still at 3.17%. Their 2-10 curve has held at +29 bps. The Aussie Govt 10yr is at 2.72% (up +1 bp from this time yesterday), the China Govt 10yr is at 3.58% and down -2 bps, while the NZ Govt 10 yr is at 2.72% which is up +1 bp.
Gold is little changed at US$1,226/oz.
US oil prices are down again today by another -US$1/bbl to just over US$68.50/bbl as the full implications of the building US crude stocks sinks in. The Brent benchmark is now just under US$79.50/bbl.
The Kiwi dollar has slipped today and now at 65.4 USc. On the cross rates we are at 92.1 AUc, and at 57.1 euro cents. That puts the TWI-5 at 69.7. The Chinese yuan is also approaching 7 to the US dollar, almost matching its lowest since early 2017, and getting nearer its rate in 2008.
Bitcoin is lower at US$6,467. 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 ».