Here's our summary of key events overnight that affect New Zealand, with news the EU has expanded its list of money laundering countries.
But first in the US, January data on inflation out overnight shows it running at +1.6% pa. That is the smallest annual increase since the June 2017 year. However, falling petrol prices (-10.1%) had a lot to do with the result; the US CPI without food and energy is up +2.2%, the same rate as for the previous two months.
With this data, they have been able to work out the rise in US 'real' weekly earnings and they grew by +1.9% after inflation, higher than the +1.4% gain in the December year.
But even that good news isn't helping the US mortgage market. The latest data reveals that mortgage applications fell at the rate of -3.7%, a faster decline, and -5% lower than the same period a year ago.
Perhaps sentiment is being knocked around by surprises most families are getting with much smaller tax refunds under the Trump tax settings than expected.
In China, their debt market got rattled again yesterday with another large company in technical default over a bond payment. In the end they came up with the payment a day late, but the stress is showing and expanding.
And China's sudden massive appetite for international travel is showing up in a fast-rising services deficit. In 2018 their overall services deficit exceeded -US$250 bln. In part to control this ballooning deficit, China is cracking down on 'illegal' currency traders.
The EU has snubbed Saudi Arabia by adding it to its blacklist of havens for money-laundering and terrorist financing, joining the likes of Iran, Syria and North Korea. The list of 23 jurisdictions, which also includes Panama, Puerto Rico and Samoa, updates an earlier, shorter list. Eight of the countries are in the Commonwealth, four are American territories. Notably, none are EU members or EU neighbours even though the Dutch-sandwich, for example, is one of the most famous corporate tax-dodging (tax laundering) strategies.
Meanwhile, EU industrial production is withering.
In Australia, they have noticed the RBNZ governor Adrian Orr's defense of its 'more capital' requirement for banks. Eyebrows have gone up when he suggested banks were on a "free ride" where "returns can be privatised and losses can be socialised".
In world equity markets, the positive sentiment carries on with expectations the US shutdown impasse is resolved and the President will sign up, and the hope that the positive talk in the US-China trade talks have some substance. On these expectations, the S&P500 is up +0.3% in early afternoon trade. This follows European equity markets who were up about +0.5% overnight. Yesterday Shanghai closed up +1.8%, Hong Kong was up +1.2% and Tokyo was up +1.3%. (Australia actually dipped -0.1%, while the NZX50 was up +0.6%.)
The UST 10yr yield is firmer at 2.70% and up another +1 bp today. Their 2-10 curve is just on +17 bps. The Australian Govt. 10yr yield is at 2.16% and up +3 bps. The China Govt. 10yr yield is unchanged at 3.09%, while the New Zealand Govt. 10yr yield is up sharply, up +7 bps at 2.21%.
Gold is up +US$3 to US$1,312/oz.
US oil prices are up again today to just over US$54/bbl while the Brent benchmark is just on US$63.50/bbl. Saudi Arabia is planning more output cuts. But the crude price rise today has been capped by reports of much larger US inventories.
The Kiwi dollar will start today sharply higher after yesterday's MPS inspired jump, now at 68.2 USc. On the cross rates we are even higher at 95.8 AUc, and at 60.4 euro cents. That pushes the TWI-5 back up to 72.8 which is where it was over a week ago.
Bitcoin is virtually unchanged at US$3,574. 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 ».