Here's our summary of key events overnight that affect New Zealand, with news OPEC is jittery after another massive slump in the crude oil price overnight.
But first, the US Federal government announced a deficit for October of -US$100.5 bln after finishing its last budget year with a massive -US$779 bln deficit (-3.8% of US GDP and up from -3.3% the previous year). That data will be released officially at 8am NZT and we will update this item then, but if it comes in as expected, it will be on the way to a -US$1 tln deficit in the 2018/19 year (-4.8% of GDP). US Federal public debt outstanding is now US$15.7 tln or 77.8% of GDP, and that is actually -US$1.1 tln more than a year ago. You would be right to ask why the debt is rising faster than what is reported in the annual deficit. Dodgy accounting.
The OECD reported that the group's overall jobless rate was down to 5.2% in September and the lowest it has been since when they started collating this data in 2008. It is a rate that is only really held high by Eurozone countries.
It is being reported that EU and UK negotiators have reached a draft Brexit deal. But it is still an open question as to whether the UK politicians will approve it once they see the final terms. Markets are ignoring the potential of this agreement, staying in a sideways mood today on Wall Street.
Yesterday, Shanghai clawed back morning losses to finish the day almost +1% higher.
Meanwhile China's equivalent TPP trade deal, the RCEP (without the TPP's pesky labout and environmental conditions) is struggling. After a fruitless meeting on Monday, trade ministers from Asean’s member countries and the bloc’s six dialogue partners – Australia, China, India, Japan, South Korea, and New Zealand – pushed back further talks on the Regional Comprehensive Economic Partnership until next year. India is a key stumbling block, resisting opening up its markets "particularly to Chinese firms".
The Americans and China have resumed contact "at all levels" a White House spokesperson confirms. A problem however is that those talks are being held with the Treasury Secretary whom the President sees as soft on China. But a top Chinese negotiator, will probably visit Washington shortly to advance some informal talks on advance of the Xi-Trump upcoming meeting at the G-20 summit at the end of the month, another cabinet secretary said. Progress on restarting dialog is as fractured as the rest of American foreign policy with officials floating various efforts to see which one the President pushes back on.
The UST 10yr yield are lower at 3.16%, a fall of -3 bps. Their 2-10 curve is still just below +26 bps. The Aussie Govt 10yr is at 2.73%, down -1 bp, the China Govt 10yr is at 3.50% and unchanged, while the NZ Govt 10 yr is at 2.82% and that was down -1 bps overnight.
Gold is marginally lower at US$1,202/oz, a -US$1 trim overnight.
US oil prices fell sharply again today, down -US$3.50/bbl and now just on US$57.50/bbl. The Brent benchmark is now over US$67.50/bbl. Opec's latest review signals that a production cut is a clear option to stem these price falls. The last time crude oil was at US$67.50/bbl our discounted pump price was NZ$1.96/L.
The Kiwi dollar will start today at 67.6 USc and a little firmer than this time yesterday. On the cross rates we are also firmer at 93.7 AUc, and at 59.9 euro cents. That puts the TWI-5 up to 72.3 and a new five month high.
Bitcoin is now at US$6,301 and down -1% overnight. 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 ».