Here's our summary of key events overnight that affect New Zealand, with news central bankers seem positive but investors have turned decidedly bearish.
Today, Wall Street is sharply lower, down -1.7% mid-afternoon New York time and that is now a cumulative -3.8 loss over the past week, -7.5% over the past month. Weak earnings from companies in international trade are pervading the market, all the result of the self-inflicted trade wars. As reflected in today's Fed Beige Book surveys, it's the rising costs outlook wot done it. In Shanghai yesterday, they closed flat, That cements a +2.0% gain over the past week, but masks a -6.4% loss over the past month. (Actually, the NZX has lost -7.5% over the same time. The ASX is down -5.8%.)
In the US, sales of new single-family homes fell to a near two-year low in September, down an eye-catching -13% year-on-year, and made worse because data for the prior three months was revised lower too, the latest indications that rising mortgage rates and higher prices are undercutting their housing market. To be fair, new homes are only a small portion of their housing market, but the existing home market is on a downer volume-wise as well.
In Canada, and as expected, their central bank has raised interest rates +25 bps to 1.75%, saying the resolution of the NAFTA deal and easing concerns over household debt gave them more confidence in Canada’s economic outlook. At the same time, they have hinted at more frequent rises in the future.
Sweden also reviewed its policy rate but made no change. But this review is widely seen as setting the stage for hikes relatively soon.
Yesterday, we reported a small and unexpected rise in machine tool orders in Japan. But what we missed within that is a surprisingly large drop of orders from Chinese customers, down more than -20%.
In a new and detailed study, airlines are warning of chaos if there is no Brexit deal. But the main impacts will be on the UK rather than the EU.
Meanwhile, the airline industry has updated its 20 year air travel forecast, predicting a compound annual growth or more than +3.5% to 8.2 bln travelers by 2037, a more than doubling of activity. Yes, China and India will grow as everyone expects, but the big gainer is growth from Indonesia, expected to become the world's fourth largest market.
In Australia, APRA data shows that banks are having trouble making loans that meet the new tighter serviceability criteria. In fact, AU$19 bln of loans issued in 2018 have not met that standard. In a AU$1.1 tln market, that is not a high proportion, but it does indicate that as they move to meet the new standards, credit availability will be getting tighter there, which in turn will depress their housing markets.
The UST 10yr yield will start today at 3.13% and another down -2 bps from this time yesterday, with their 2-10 curve now under +27 bps. The other yields we follow have moved similarly; the Aussie Govt 10yr is at 2.66% and down -2 bps, the China Govt 10yr is at 3.57% and down -3 bps, while the NZ Govt 10 yr is at 2.66% and down -2 bps.
Gold is at US$1,227/oz and down -US$4 overnight.
Oil prices have stayed down after yesterday's big drop and holding at a six week low. Today US oil prices are just on US$67/bbl. The Brent benchmark are just over US$76.50/bbl.
The Kiwi dollar will start today little weaker at 65.2 USc. On the cross rates we are at 92.3 AUc, and at 57.3 euro cents. That leaves the TWI-5 at 69.8.
Bitcoin is now at US$6,467, again 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 ».
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.