Here's our summary of key events overnight that affect New Zealand, with news markets are increasingly worried about the state of the Chinese economy, a place where Beijing is trying to keep bad news from leaking out.
But first, American producer prices surged higher at the rate of +2.9% and well above expectations. This was the highest rate since September 2012, and markets expect that to bolster the Fed's resolve to raiser rates again next month.
US wholesale sales for September were revealed to be nearly +8% higher than the same month a year ago. An inventory rise is part of the reason, up more than +5%. But the inventory/sales ratio was unchanged in the month, still a respectable 1.26 invetoryies:sales.
Mexican industrial production rose impressively in September, although at about the rate analysts were expecting. NAFTA is still working well for them, bolstered by American companies ignoring Washington bluster.
In China, consumer prices rose +2.5% in October and the same as September, while the growth in producer prices fell to seven-month low of +3.3% pa.
Another top Chinese official called for stepping up credit support for the private sector as China’s economic expansion slowed to its weakest pace since the financial crisis. Although the private sector accounts for more than 60% of the economy, it receives only 25% of the loans, Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission said in an interview published Wednesday in a state-run newspaper. But markets are worried by the push, downgrading bank stocks.
And Bloomberg is reporting that soon-to-be-published research will show roughly 22% of China’s urban housing stock is unoccupied, according to Professor Gan Li, who ran the main nationwide study. That adds up to more than 50 million empty homes. "There’s no other single country with such a high vacancy rate," he said.
And Chinese new-car sales are on track to decline this year for the first time since 1990, data released Friday shows, in a further indication of a slowing economy.
Wall Street is down more than -1.3% today. Shanghai was down -1.4% yesterday on those Beijing-mandated calls for banks to lend more to ever-risky clients.
And despite all these mounting concerns, the iron ore price is rising and rising on Chinese demand.
Taiwan wants to join the TPP, a move sure to put New Zealand among others in a tricky situation with a bullying Beijing.
The UST 10yr yield is ending the week at 3.19% and a net dip of -2 bps for the week. Their 2-10 curve is lower at +26 bps. The Aussie Govt 10yr is at 2.75% (up +5 bps over the week), the China Govt 10yr is at 3.50% and down -5 bps for the week, while the NZ Govt 10 yr is at 2.82% and up a remarkable +21 bps over the week. New Zealand swap rates rose +15 to +25 bps across most durations for the week. Our 2-10 swap curve is back up to +91 bps and above its three month rolling average of +86 bps.
The VIX has slipped to 18 this week and down from 21 last week. But it is still above its average over the past year of 15. And the Fear & Greed index has remained at the extreme end of the 'fear' side but has gotten a little less extreme in the past few days.
Gold is down sharply overnight to US$1,208/oz. That is a -US24 drop in a week.
US oil prices just keep on dropping and today to just over US$60/bbl. That is a -$US3/bbl weekly change. The Brent benchmark is now on US$70/bbl also a pullback from this time last week. Those cumulative declines puts oil in a bear market. Excess supply is the core reason, from everywhere especially Russia and Saudi, on top of diverted Iranian supply. Oddly, the US rig count is sharply higher this week; don't expect that to last.
The Kiwi dollar is ending the week +1 c stronger at 67.4 USc after the good unemployment data and higher inflation expectations announced during the week. On the cross rates we are also firmer at 93.2 AUc, and stronger at 9.4 euro cents. That puts the TWI-5 at back up to 71.9 ending the week near its highest in four months
Bitcoin is now at US$6,369 and identical to where it was one week ago. This rate is charted in the exchange rate set below.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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