Here's our summary of key events overnight that affect New Zealand, with news the economic expansion around the world is slowing very noticeably especially in international freight volumes, and the change is quite sudden.
But in the US, data was released today on the expansion of their services sector in October. The Markit survey indicated no change from their earlier flash result at a healthy level while the more widely reported ISM survey of the same thing showed a slippage. The Markit one indicated input price inflation up its fastest since September 2013, and the rate of job creation dipping to a nine-month low. The ISM one has the pace of price rises slipping back a bit, while the employment component dipped again. Overall, the US services sector is still expanding but at a slower rate.
Mid-term election results are awaited by markets; the S&P500 is level-pegging today and will probably do so for the next few days.
In India, their services sector's expansion is picking up with a strong boost in jobs growth.
In China, and unlike the official one, the private sector services PMI is flashing strong warnings signals. It fell significantly, dropping from 53.1 (similar to the official one), to just 50.8 and barely recording any expansion. That is now its lowest since September 2017. The subindex for new business dropped to its lowest point since November 2008. There has been a very sharp weakening of demand for services in China over the past month. And don't forget their factory PMIs are also near a stall.
This may not change soon. The US Administration's indications that it wants new negotiations with China and anticipates a deal soon is facing being ignored by China. China has got some American farm products on the ropes.
In Japan, their services sector activity is picking up and expanding faster. New business growth is up to near five and-a-half-year high. But they also report higher input costs. Even Singapore's PMI has bounced off its recent sudden dip.
However, China's slowdown is being matched in Europe and is showing up early in airfreight volumes. There were up only +2.0% year-on-year to September and well below the five-year average of +5.1%. International freight growth in the Asia/Pacific is down to just +1.4%, in the USA it is down to +1.5%, and in Europe to +1.2%. As regular readers will know, these are suddenly very low growth levels and undoubtedly reflective of trade tensions. Interestingly, even internal North American domestic airfreight growth has slumped to just +1.5% as well.
In Australia, there are reports that Chinese mainland investors in residential property in "the lucky country" are taking a bath. The only 'lucky' players are the Aussie developers. It seems, far from Chinese investors winning in these markets, they are turing out to be losers, with a net flow of funds and control away from China to Australian sellers. The Chinese got property that is worth less than they paid and comes with heavy liabilities; the Aussies got their cash.
We should also note that iron ore prices are currently firm and up almost +20% since mid July.
The UST 10yr yield is marginally lower at 3.20%. Their 2-10 curve is back under +29 bps. The Aussie Govt 10yr is at 2.73% (up +3 bps), the China Govt 10yr is at 3.56% and up +1 bp, while the NZ Govt 10 yr is at 2.67% and up a substantial +5 bps.
Gold is down -US$3 overnight to US$1,229/oz.
US oil prices are little-changed today to just over US$63/bbl. The Brent benchmark is now over US$73/bbl also little-changed. This stability shows that markets have fully priced the US Iran sanctions which are now in effect, and prices are lower now than a few weeks ago.
The Kiwi dollar is starting today unchanged at 66.6 USc, and exactly the same as this time yesterday. On the cross rates we are also unchanged at 92.5 AUc, and much the same at 58.4 euro cents. That leaves the TWI-5 at 71 and near its three month high.
Bitcoin is now at US$6,414 which is virtually unchanged from 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 ».