Here's our summary of key events over the weekend 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 raise rates again next month.
And 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 invetories: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.
The Chinese premier called for lower interest rates on loans to private sector companies. This follows another top Chinese official who called for stepping up credit support for the private sector as China’s economic expansion slowed to its weakest pace since the 2008 GFC. Although the private sector accounts for more than 60% of the economy, it receives only 25% of Chinese business loans. However markets are worried by the push, downgrading bank stocks.
One firm who doesn't need loan support is Chinese e-commerce giant Alibaba who did a record NZ$45 bln in sales yesterday during its 24-hour online retail frenzy, Singles' Day, smashing the previous record. That was +27% more than last year but oddly this is their slowest percentage year-on-year growth ever for the event. The dollar growth of course was still a record.
But 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.
Still, the iron ore price is rising and rising on Chinese demand.
Wall Street was down more than -1.3% on Friday. Shanghai was down -1.4% on those Beijing-mandated calls for banks to lend more to ever-risky clients - and at reduced interest rates. Chinese financial system resilience and stability may face some self-imposed challenges.
Back in the US, the Fed will start following many other central banks later this month releasing a semi-annual review of American financial stability.
The UST 10yr yield is now at 3.19% and a net dip of -2 bps last week. Their 2-10 curve is lower at +26 bps. The Aussie Govt 10yr is at 2.75%, the China Govt 10yr is at 3.50%, while the NZ Govt 10 yr is at 2.82% and that was up a remarkable +21 bps over the past week. New Zealand swap rates rose last week +15 to +25 bps across most durations.
Gold is down sharply to US$1,209/oz. That is a -US$24 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. Now Saudi Arabia has suddenly decided to cut production by -½ mln barrels per day.
The Kiwi dollar ended last week +1c stronger at 67.4 USc after the good unemployment data and higher inflation expectations. On the cross rates we are also firmer at 93.3 AUc, and stronger at 59.5 euro cents. That puts the TWI-5 back up to 72 and starting this week near its highest in four months.
Bitcoin is now at US$6,328 and very little changed. 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 ».
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