Here's our summary of key events overnight that affect New Zealand, with news the world is awash in weakening economic data, reminding us how fortunate we are in New Zealand.
Update: Firstly, the latest US Fed minutes indicate they are on track to raise rates at their December meeting. But the number of rate hikes in 2019 is now less certain.
American consumer spending increased by the most in seven months in October, but underlying price pressures slowed, with the US inflation measure preferred by the Federal Reserve posting its smallest annual increase since February.
Meanwhile, their housing market trends took another dive lower. Pending home sales fell -2.6% in October from the prior month and far below the +0.5% gain expected. That makes this the tenth straight month this measure has declined on an annual basis meaning the October 2018 level was down -6.7% year-on-year and taking them to a four-year low.
And unemployment claims in the US are starting to worry some economists. Initial claims rose by +10,000 last week to 234,000, the third straight gain and the highest level since May. Markets were expecting a decrease to 220,000.
In China, a major trend is developing as private business concerns struggle in an increasing uncertain economic environment. The private sector there accounts for half of the country’s tax revenue, 60% of GDP and 80% of urban employment. But it is shrinking as state-owned enterprises have begun absorbing many of these companies as they suffer severe difficulties. The Chinese private sector is shrinking, and surprisingly quickly.
China's African Swine Fever outbreak is spreading and has never been in control. Now neighbouring countries are worried they will be a victim. This is an issue that could turn meat markets upside down.
In the EU there has been a bit of an unexpected turn, business sentiment stopped falling in November in the EU, picking up when the trend has been down.
In Germany, Deutsche Banks troubles with the Panama Papers keeps rolling on. Their head office and other locations in Frankfurt were raided by police and tax investigators overnight as part of a money laundering probe. Prosecutors said the raids targeted two Deutsche Bank employees, and others who have not yet been identified. This is the bank Donald Trump turned to after he stiffed New York banks in his business dealings, who then shunned him.
Further, German company Bayer is cutting 12,000 jobs in a major world wide restructure that will see it exit its animal health business.
NZ ranked #2 in world for prosperity. We were let down by education, health, and personal safety, but gained very high scores for economics, governance, personal freedom, natural environment and social capital. However, we slipped from #1 in 2017, 2016, 2015 and 2014, this time pipped by Norway. Canada is #8, Australia is #13, and USA #17.
In international trade transactions, businesses are rejecting the Chinese Yuan, according to the latest data from Swift. The CNY now only commands 1.01% of all trades, down from 1.21% last year. In fact, the AUD is more popular and trusted at 1.41%. China's goal of making their currency a core component in world trade is failing. The US dollar is still dominant, but it is the euro that is making the biggest gains.
All eyes now turn to the G20 meeting in Argentina over the weekend, and especially on the China:US trade talks - even if there are any.
The UST 10yr yield is lower at 3.04% (At one point earlier it dipped briefly below 3%.). Their 2-10 curve has fallen sharply too to now just on +22 bps. The Aussie Govt 10yr is at 2.60% (down -2 bps), the China Govt 10yr is at 3.40% and down -1 bp overnight, while the NZ Govt 10 yr is at 2.61% and down -4 bps.
Gold has risen for a second day, this time by +US$6 to now be at US$1,226/oz.
US oil prices are a little higher today at just under US$52/bbl. The Brent benchmark is now just under US$60/bbl.
The Kiwi dollar is a little lower to be now at 68.5 USc. On the cross rates we are also marginally softer at 93.8 AUc, and up at 60.2 euro cents. That sets the TWI-5 back at 73.
Bitcoin has moved up again and is now at US$4,323 which is a +2.6% rise from 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 ».