Here's our summary of key events over the weekend that affect New Zealand, with news it's back-to-work with things looking a little brighter.
In equity and financial markets risk sentiment has improved on the basis that the US and China are now expected by traders to patch things up soon. The S&P500 was up a strong +1.3% on Friday and that followed European indexes that were up more, almost +2%. In turn Tokyo, Hong Kong and Shanghai all gained more than +1.2%.
Helping somewhat were remarks by the head of the New York Fed who said now is the time for policymakers to show "prudence, patience, and good judgment" - interpreted to mean fewer rate hikes in 2019. But there is no progress on resolving the shutdown with another Fed governor saying it is starting to hurt growth.
And perhaps supporting that restrained view is that American consumer sentiment tumbled in early January to its lowest level in more than two years ago amid fears that the shutdown and financial market volatility will slow the US economy.
In December American factory production rose amid broad-based gains in output. Industrial production was up an overall +4.0% year-on-year - but most of the gains were in 'mining' (+13.4% = oil and coal) and 'materials' (+6.1%).
Canada's inflation rate rose to 2.0% in December, higher than expectations of +1.7%.
In Vancouver, there is a new campaign underway to scrap its 'speculation and vacancy tax', one that now requires declarations from 1.6 mln homeowners and take about 30 mins to complete. A government coalition party, the Green Party is pushing to get rid the 'stupid tax'.
In Hong Kong, house prices are falling.
And later today, China is expected to report its Q4-2018 GDP growth rate, a level that is expected to undershoot at +6.4%. At that level it will be their slowest growth in 28 years.
In Japan there is a ministerial meeting of the eleven TPP members. And they have decided to open the Treaty up to new members. They are essentially trying to entice the US back in, but other may join first.
Analysts at Fitch Ratings say a series of recent weak data releases have dented their 2019 world trade growth forecasts, but not significantly. They are still forecasting that 2019 growth will be above trend with the US and China doing ok although Europe will be weak.
In Australia, the delayed payment operator Afterpay, which doesn't charge interest (and tis therefore not subject to regulation) but derives its income from fees when customers face credit stress, is expanding aggressively in the US. It is also reporting record results. Regulators are worried.
And staying in Australia, they have long allowed "self-managed superannuation" which has turned into a vehicle to put your retirement funds into residential investment property. The regulator (The ATO) is now worried about the effect of this because most of this is a leveraged investment - and the underlying security is declining in value. That risks the base retirement savings, especially if lenders find a loan breach and call in the loan via a mortgagee sale. The ATO says almost 6% of Aussie Super in SMSF structures is at risk, some compounded by the fact they involve personal guarantees. We are talking about more than $42 bln exposed of the AU$755 bln in SMSF plans (which more than a quarter of the AU$2.8 tln in Australian super schemes), and the ATO says this is now a systemic risk. Westpac is the most exposed.
Wholesale interest rates rose at the end of last week following four days of declines into record-low territory and the rises took rates back to where they were at the start of the week. The UST 10yr yield also rose on Friday at just on 2.79% and a +10 bps gain for the week, most of it on Friday. Their 2-10 curve is settled at +17 bps.
Gold is down -US$10 to US$1,282/oz.
US oil prices moved strongly higher are now just under US$54/bbl while the Brent benchmark is just under US$63/bbl. Both are gains of more than +US$1/bbl.
The Kiwi dollar starts today just a little softer from where we left it on Friday at 67.3 USc but which is almost a -1c loss from this time last week. On the cross rates we are softer too, down to 94.1 AUc, but little-changed at 59.3 euro cents. That pulls the TWI-5 down to 71.7.
Bitcoin is also softer at US$3,525, down -2.2% over the weekend. 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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