Here's our summary of key events over the weekend that affect New Zealand, with news of a lull on the trade war skirmishes.
In Argentina, the Chinese and Americans agreed a short 90-day truce in their trade war. The Americans agreed to not raise any more tariffs while further talks take place. Exactly what are the next steps is somewhat unclear and both sides talked platitudes and past each other. But the G20 hasn't erupted into chaos, and that will be viewed as a 'success'. Interestingly, the Americans talked of a 'tremendous success' but have not made any formal statement of substance. No-on really thinks this is enough to resolve their deep divisions.
However, Wall Street will no doubt enter a relief rally, buoying stocks exposed to trade. This will come on top of the rally triggered by an increasingly dovish Fed that began on Friday and saw the S&P500 end the week up +3.3% and back in positive territory for the year. By the way, Wall Street will be closed on Thursday NZT Monday (tomorrow) as a mark of respect for President George HW Bush. Another reason to bounce when it opens is an unexpectedly strong regional survey.
Canada's final GDP growth data for Q3 2018 came in lower than expected at +2.1% pa and down sharply from the +2.9% growth in Q2.
Japan's housing starts unexpectedly rose in October, taking them to a +950,000 annual rate and a rare, if only still minor, year-on-year gain. And their industrial production rose +2.9% year on year, also higher than expected.
In China, their official factory PMI survey indicates that this sector has stopped expanding. The index fell to 50 in November and the lowest this index has been since mid 2016. Expect a rally on Shanghai markets when they open today however on the trade news.
India's growth slowed to +7.1% pa in Q3 2018, a sharp drop from +8.2% pa in Q2.
In Australia, iron ore prices are down more than -5% in the past two weeks, and the outlook through 2019 isn't particularly bright.
On Friday, the ASX200 took a bath, down -1.6% on the day. That means it is down -6.5% for 2018, and down a remarkable -10.8% since the beginning of September. Investors are sceptical of Australia's prospects, and particularly negative about how public policy is [not] being developed in their highly partisan environment.
The UST 10yr yield is starting the week at 2.99% and a net dip of -6 bps for the week, its lowest since mid September. More importantly, their 2-10 curve has slipped -4 bps to now be under +20 bps and its lowest since August, and continuing a worrying signal with a new downward trend that started in October. The Aussie Govt 10yr is at 2.59% (down -5 bps over the week), the China Govt 10yr is at 3.38% and down -4 bps for the week, while the NZ Govt 10 yr is at 2.59% and down -11 bps over the week. New Zealand swap rates fell this week down -4 to -8 bps although compared with a month ago we are up marginally.
Gold is down -US$4 at US$1,222/oz.
US oil prices are very weak again today and at new low levels at just under US$51/bbl. The Brent benchmark is now just under US$59.50/bbl. These prices are a -20% drop in November, this commodity very much in a bear market. As these prices are unchanged in the past week, that suggests low prices are bedding in. Oddly, the US rig count is still holding at its 200 week high despite these very low prices. And US crude production has surged to a new all-time record.
The Kiwi dollar is starting the week firmer at 68.8 USc, which is a whole +1c up from this time last week but back exactly where it was two weeks ago. On the cross rates we are noticeably firmer at 94.2 AUc, and at 60.9 euro cents. That puts the TWI-5 at up to 73.4 and its highest since April.
Bitcoin is now at US$4,088 which is an +11.5% gain for the week, a week when heavy volatility set back in again. 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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