Wall Street and EU equities turn lower; pessimism on US-China trade talks; EU data weak; India cuts rate; airtravel growth slows; NAB changes; UST 10yr 2.66%; oil and gold down; NZ$1 = 67.6 USc; TWI-5 = 72

Here's our summary of key events overnight that affect New Zealand, with news that markets seem to have exhausted their 2019 enthusiasm already.

Firstly, Wall Street is losing faith in the US Administration. Equities are down -1.4% so far and the most in two weeks as investors grow anxious that the US won’t reach a deal with China before a March deadline for escalating the trade war. Treasury yields are tumbling. The State of the Union speech has failed to inspire anyone. All this follows a sharp selloff in Europe overnight. The German stock market was down -2.7%.

Some of that is a reaction to the very poor German industrial production data. Markets expectations were undershot in a confidence-sapping way, and those expectations were't high to start with.

And there was nothing in the EU's first 2019 Economic Bulletin to encourage investors either in which growth forecasts were revised lower, especially for both Italy and now Germany.

In India, the new governor of their Reserve Bank, appointed to be more amenable to the Government, has delivered with a surprise rate cut to 6.25% just ahead of an upcoming national election.

Yesterday we reported weakening December airfreight market. Today we can report that the passenger airtravel market is much stronger but its growth is slowing. December rose +5.3% against the same month in 2017, the slowest year-over-year pace since January 2018 and a continuation of the trend that saw demand growth decelerate to an annualised rate of +5% over the second half of 2018 compared to a +9% pace in the first half. Asia/Pacific markets are doing better than most, however.

In Australia last night, both the Chairman and CEO quit at National Australia Bank, the two biggest scalps of the Hayne Commission. Investors may be surprised; they had bid up the NAB equity price by +9% since its pre-Hayne low. Of course, now these two lightning-rod positions have been culled, that share price may move sharply higher again today. But despite it's car-crash attractiveness to headline writers, arguably the bigger news of the week is the RBA's sharp dovish turn. That has reset local market fundamentals far more.

The UST 10yr yield is lower today at 2.66% and falling another -2 bps from this time yesterday. Their 2-10 curve is now just on +17 bps. The Australian Govt. 10yr yield is at 2.09% and another big -8 bps retreat overnight. Remember, this was 2.25% at the start of February and 2.75% just 90 days ago. That is a very big reset and there is no way to know it is over yet. The China Govt. 10yr yield is unchanged at 3.15% because markets there are closed of course, while the New Zealand Govt. 10yr yield is at 2.18% and also down sharply, down -6 bps in sympathy with the Aussie. Also dropping sharply are local swap rates which will start today about -10 bps lower across the board and hitting new all-time record low levels for all terms except the ten year (which is close).

Gold is down -US$2 at US$1,310/oz.

US oil prices are sharply lower today, down about -US$2/bbl to US$52/bbl while the Brent benchmark is just on US$61/bbl.

The Kiwi dollar will open today at 67.6 USc, representing a slight softening overnight and embedding the -1c drop earlier in the week. On the cross rates we are at 95.3 AUc, and at 59.5 euro cents. That puts the TWI-5 at 72.

Bitcoin is little-changed today to US$3,358 after yesterday's drop. 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 ».