China goes all out but is ignored elsewhere; US data weaker; China GDP growth slows, house prices stable, retail sales rise; Italy rating cut; UST 10yr at 3.19%; oil and gold slip; NZ$1 = 65.5 USc; TWI-5 = 69.9

Here's our summary of key events over the long weekend that affect New Zealand, with news the China 'home team' is putting on a spectacular display.

Firstly, if you were following our weekend service, you may find some of this was covered there.

Wall Street and American equity markets closed flat on Friday. But that was in contrast to Shanghai which was up a spectacular +2.6% on the day. It sprang to life in the afternoon session, all happening in the one hour to 2:15pm their time. It had all the hallmarks of a stage-managed pump by the 'home team'. Then yesterday, it rose even more spectacularly, up another +4%. Some of that spilled over into Hong Kong with their markets up +2.3% yesterday. All this comes after the Chinese State Council said it will 'support' the private sector, following up with the central bank issuing the credit. Public sector stimulus isn't doing the job, it seems. The effect of all this on other international markets? Not much.

Meanwhile, the S&P500 is a little lower on Wall Street this morning, and that follows a similar trend in European markets earlier.

In the US, home sales volumes fell in September by -4.1% from the same month a year ago and the most in over two years. The median existing-home price for all housing types in September was US$258,100 (NZ$391,600), up +4.2 percent from September 2017. The US national economic activity index has slipped more than expected.

In Canada, they had a surprise fall in their rate of inflation. It came in at +2.2% in September, down sharply from +2.8% in August. Easing petrol costs were behind the reduction. A surprise fall in the level of retail sales in August was also reported, a surprise because a rise was expected.

Chile's central bank has raised its policy rate by +25 bps to 2.75% and that is despite inflation easing there. A strong labour market and rising growth were behind the decision to tap the brakes a little at this stage.

China’s economy grew at a slower-than-expected +6.5% in the third quarter, the weakest since the global financial crisis.

Retail sales however rose faster than expected, up +9.2%. With that retail sales data is something of a milestone, from an outsiders point-of-view anyway. In the first nine months of 2018, national online retail sales amounted to 6.3 tln yuan, which means in US dollars that is more than US$1 tln, a year-on-year increase of +27.0%. In 2017 it took all twelve months to achieve US$1 tln level.

Home prices in major Chinese cities were stable overall in September as local government tightening property curbs weigh on markets, especially the large ones. On a month-on-month basis, four first-tier cities - Beijing, Shanghai, Shenzhen and Guangzhou - saw declines in prices for both new and existing homes. Second- and third-tier cities are still posting gains however.

Moody's has reduced Italy's credit rating to the lowest investment grade Baa3, one step away from a junk rating. This downgrade is a direct reaction to the Italian government’s decision to accept higher budget deficits in coming years.

In Australia, a key by-election has brought a 20% swing against the current conservative Federal Government, removing the slim majority the Government had in Canberra. 

And petrol prices there have reached their highest since 2008, A$1.593/L (NZ$1.719/L or NZ$1.779/L if we equalise the differential on GST.) Tax takes 40% of Australian pump prices, compared with 42% in New Zealand. The oil company component is also less there.

In the US, benchmark yields rose as investors increasingly accept that the Fed will keep raising rates over the next year. The UST 10yr yield will start today at 3.19% with their 2-10 curve now under +29 bps. The other yields we follow were basically unchanged; the Aussie Govt 10yr is at 2.71%, the China Govt 10yr is at 3.59%, while the NZ Govt 10 yr is at 2.69%.

Gold is at US$1,222/oz and down -$4 overnight.

US oil prices are marginally lower at just under US$69/bbl. The Brent benchmark is now just over US$79.50/bbl.

The Kiwi dollar will start the week softer at 65.5 USc. On the cross rates we are also higher at 92.5 AUc and that's its highest in 16 weeks, and at 57.1 euro cents. That puts the TWI-5 at 69.9.

Bitcoin is now at US$6,447, little-changed from 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 ».