Here's our summary of key events overnight that affect New Zealand, with news key trade negotiations took a sharp turn away from likely agreement today.
But first, American consumer confidence fell to a 1½ year low in January as the partial government shutdown and financial markets turmoil left households nervous about the economy's near-term outlook. The result was way below analysts already low expectations.
And US home price growth is slowing, and in fact may have turned down. The Case-Shiller National Home Price Index, which measures average home prices in major metropolitan areas across the country, rose +5.2% in the year ending in November, down from a +5.3% increase reported in October. But there was a -0.1% fall in November from October, the second month-on-month dip in a row.
The US trade hawks are in ascendance and they have ramped up pressure in the Chinese trade negotiations, indicting Huawei in two separate legal cases (fraud and theft). These legal moves unseal hard evidence that many countries will find useful. China is requiring suppliers to Huawei to move production to China. This pressure will also be felt in Wellington. The New Zealand decision to side with China over the the issues in Venezuela may get an echo in the Huawei case, even though we have already blocked Huawei access here for out 5G network. The American moves will unrestrain China's diplomatic pressure which will come in the form of trade threats and access. Trade negotiations from here will get even more difficult.
World bond and equity markets are in a pause mode today with investors unable to decide what the direction should be.
In China, iron ore prices are rising following the Brazilian iron ore mine disaster. This is a tragedy that will benefit Australia - a lot.
In Australia, the upcoming election will be contested over 'jobs growth' - and that will be a non-subtle contest over population policy. The current government has delivered on its jobs promise to create 1 mln new jobs and will promote that heavily in the upcoming campaign to create another 1.2 mln new jobs. Unlike in most other areas of public policy, it has credibility here. But behind the claims are the fact that these targets can only be achieved via higher population growth. It's a debate that may empower anti-immigrant populists on the hard right of politics.
The UST 10yr yield is unchanged today to be just under 2.72%. Their 2-10 curve is now under +15 bps. The Australian Govt. 10yr yield is at 2.23%. The China Govt. 10yr yield is also unchanged at 3.16%, as is the New Zealand Govt. 10yr yield is at 2.35%.
Gold is up another US$7/oz to US$1,309 and that is a seven month high.
US oil prices have risen today, up about +US$2/bbl to just on US$53.50/bbl while the Brent benchmark is just on US$61.50/bbl. The reversed yesterday's drop. The US has sanctioned the state Venezuelan oil company.
The Kiwi dollar starts today holding at the 68.3 USc level. On the cross rates we are little changed at 95.8 AUc, and at 59.8 euro cents. And that has the TWI-5 still at 72.4.
Bitcoin is only marginally lower today at US$3,403. This rate is charted in the exchange rate set below.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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