Here's our summary of key events overnight that affect New Zealand, with news that politics seems to be driving the economic news today.
Wall Street is treading water, with the United States and China continuing their trade negotiations with no clear outcome in sight, and Congress still struggling to find a way around the impending reprise of the shutdown.
Meanwhile, the NY Fed published a survey of consumer sentiment today that show them as less optimistic generally about the economy and changes in their own financial situations. The share of households expecting to be better off a year from now fell to 39%, the lowest reading since November 2016.
China is back from its week-long holiday, but spending over that period grew at its slowest pace in seven years and reflecting wider troubles in China's economy. And it turns out two large private corporate borrowers have defaulted on bonds this month.
And we should note that tensions are rising again in the South China Sea. And it is not just because the US is sailing through the area. China is now trying to intimidate the Philippines. These flash points could explode, especially if the US-China trade talks break down.
In Italy, which as more than 2,400 tonnes of gold in its reserves, their new government is looking at using these to support their spending programs without breaching their EU commitments.
In Spain, they have just raised their minimum wage by +22% to €1,050 per month (NZ$406 per week). Their economy had grown +2.5% in 2018 but that was slower than the +3.0% growth in 2017, so this is a high-stakes gamble that the extra purchasing power by this jump in social transfers will pay for itself in growth and higher tax collections.
Today, Wall Street is little changed in mid-afternoon trading. That is in sharp contrast to the strong +1% gains in Europe overnight, and yesterday's +1.4% rise in Shanghai. Hong Kong rose +0.7%.
But the ASX fell yesterday, despite the sharp rise confirmed for the iron ore price. Part of the reason is that second-tier banks are falling out of favour as markets see them as struggling to absorb the costs and lessons of the Hayne Report.
The UST 10yr yield is higher at 2.66% and up +3 bps. Their 2-10 curve is just under +17 bps. The Australian Govt. 10yr yield is at 2.09% and down -1 bp. The China Govt. 10yr yield is back from holiday, adjusting lower by -6 bps to 3.09%, while the New Zealand Govt. 10yr yield is holding at 2.11% and its record low.
Yesterday local wholesale swap rates rose by +3 bps at the short end of the curve and by +1 bp at the long end which puts our 2-10 curve at a 28 month low.
Gold is down -US$5 at US$1,309/oz.
US oil prices are -US$1 lower today at just under US$52/bbl while the Brent benchmark is just on US$61.50/bbl.
The Kiwi dollar will start today marginally softer at 67.3 USc. On the cross rates we are at 95.3 AUc which is marginally firmer, as is the Kiwi against the euro at 59.7 euro cents. That leaves the TWI-5 at 72, a level it has been for a week.
Bitcoin is marginally lower today at US$3,589. 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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