Here's our summary of key events overnight that affect New Zealand, with news the signs of a global economy slowdown are starting to build.
But first, in the US consumer prices increased by the most in nine months in October amid gains in the cost of petrol and rents. This steady rise in inflation that likely will keep the Federal Reserve on track to raise interest rates again in December.
Meanwhile, US benchmark 30 yr mortgage rates hit 5.22% with points and a seven year high. Even without points, it is at the same 7 year high. That has resulted in the flow of new mortgage applications slowing and they were in fact -3.2% lower in a week and that is after a -5% drop the previous week.
Wall Street is down -0.7% so far today. Shanghai fell -0.9% yesterday.
In Canada, a new analysts shows that higher interest rates and tougher mortgage qualification rules have significantly improved the quality of new lending there. The share of new mortgages going to highly indebted borrowers - those with loan-to-income ratios of above 4½ times - dropped sharply to 13% in the September quarter of 2018, down from more than 18% last year.
But another Bank of Canada survey shows Canadians think the risk of a global economic slump is rising significantly.
In China, industrial production actually rose in October, which wasn't expected. However, retail sales came in surprisingly weak and even below weak expectations, and that will give impetus to new stimulus programs there. One closely-watch piece of data shows only a +4.8% rise in electricity production. Sadly, Chinese coal production rose +8% and coal imports were up slightly more.
Japan’s economy contracted -1.2% in the third quarter and that was slightly more than expected, hit by natural disasters and a decline in exports, a worrying sign that trade protectionism is starting to take its toll on overseas demand. Germany also contracted.
In Fiji the likely election of the current military leader Bainimarama as a legitimate democratically elected prime minister will be seen as a setback for those wanting to curb China's influence in the region. This is our local backyard 'FijiFirst' populist event with the rise and entrenchment of strongman politics.
Details of the Brexit deal are starting to leak out. It seems the UK will continue to pay into EU budgets after March 29, 2019 separation through until at least 2020. It will lose its say in the EU, but EU law will continue to apply. Northern Ireland will continue to be in the EU and be subject to EU customs rules, it seems. At least until yet another deal is agreed. And the ongoing relationship between the UK and the EU will be modeled on that between the EU and Ukraine.
In Australia, consumer confidence improved for a second month in November, with people more upbeat on their finances and the long-run economic outlook. The Melbourne Institute index of consumer sentiment rose +2.8% in November, building on the October result when it gained +1%. It is a survey that has struggled to be consistently positive over the past five years.
The UST 10yr yield are lower at 3.13%, a another fall of -3 bps. Update: It has since fallen to 3.09%. Their 2-10 curve is still just on +25 bps. The Aussie Govt 10yr is at 2.70%, also down -3 bps, the China Govt 10yr is at 3.46% and down -4 bps, while the NZ Govt 10 yr is at 2.80% and that was down -2 bps overnight.
Gold is unchanged at US$1,203/oz.
US oil prices fell again today, down another -US$1/bbl overnight and now just on US$56.50/bbl. The Brent benchmark is now over US$66.50/bbl. Maybe the price is finding some support at present however as producers race to agree production cuts.
The Kiwi dollar will start today firmer yet again and now at 67.9 USc. On the cross rates we are also firmer at 94.1 AUc which is the first time above 94 since April, and at 60 euro cents. That puts the TWI-5 up to 72.5 and a new five month high.
Bitcoin is falling significantly today and is now at just US$5,646 and a massive -10.4% slump overnight, breaking a recent period of stability. Because this fall has just started in the past hour or so, it is not yet really clear what triggered it. We will update this item when it is known. but the price is now back to where it was in October 2017. 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 ».
We welcome your comments below. If you are not already registered, please register to comment
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.