Here's our summary of key events overnight that affect New Zealand, with news China is hunkering down more with a new private company rescue package on the way.
But first, all eyes will be on Adrian Orr and the RBNZ's Monetary Policy Statement at 9am this morning, especially after yesterdays dramatic surprise with our labour market data, and the sharp rise in inflation expectations.. We will have full overage of course.
Elsewhere, Wall Street is rising and is up +1.6% in afternoon trade as investors piled into technology and healthcare sectors after their midterm elections led to a divided American Congress as expected. This is raising expectations that tighter regulations would be harder to push through Congress now making it easier for the dominant to remain with those market advantages. Investors seem to be able to live with a deeply divided country, even as the US dollar fell and there was a shift to bonds in a risk-off mood.
US mortgage applications fell more than expected, down -4% in a week. That puts them at their lowest level since December 2014. The average contract interest rate for a standard 30-year fixed-rate mortgages backed by the FHA rose to 5.15%, a +7 bps jump in one week.
We are awaiting US consumer credit data from the US Fed for September and markets expect a small slowdown from August. When that data lands, we will update this note here. Update: This data came in slightly lower than forecast, but August was revised higher.
On tariffs, Gary Cohen, the recently departed Trump Administration chief economic adviser, has described tariffs as a "tax on Americans", saying what all economists know but what a financially illiterate President (and many voters) can't get their head around as they pursue short-term jingoistic trade policies.
China's foreign exchange reserves were lower in October by -US$34 bln, but still managed to stay above the psychologically important US$3 tln level, just.
And China's central bank has launched another fund to supply equity finance for companies not longer able to get it from investors in the normal markets. This is an indication of the seriousness of their current credit crunch and lack of confidence in their economy by investors. Apparently forced takeovers by SOEs isn't enough to prevent many private enterprises from going under. One sector particularly hard hit is property development, where S&P is warning of a rising default risk. Belt-tightening stories for consumers are starting to appear.
In Australia, the new sport for economists seems to be outdoing each other in calling the size of their housing market declines. Macquarie analysts now say the overall decline could be -10% in nominal prices with Sydney and Melbourne being more like -20% from the peak. At those levels, that would make it the largest housing market retreat in 40 years.
The UST 10yr yield is down -1 bps at 3.20%. Their 2-10 curve is now under +26 bps. The Aussie Govt 10yr is at 2.73% (unchanged), the China Govt 10yr is at 3.52% and down -2 bps, while the NZ Govt 10 yr is at 2.77% and up a remarkable +10 bps today.
Gold is up +US$2 overnight to US$1,228/oz.
US oil prices are still under US$62/bbl, while the Brent benchmark is now just over US$72/bbl.
The Kiwi dollar is starting today much firmer at 67.9 USc which is up more than +1c in a day and up +2½c over the past week. On the cross rates we are up to 93.3 AUc and a five month high, and the same at 59.2 euro cents. That puts the TWI-5 at 72.1 and also near its five month high.
Bitcoin is now at US$6,527 which is +1.3% above 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 ».