US China trade talks likely to be extended; Buffett hit by mark-to-market; Fed mulls pullback; Canada retail lower; IMF wants fees for guarantee; UST 10yr 2.65%; oil and gold stable; NZ$1 = 68.4 USc; TWI-5 = 72.9

Here's our summary of key events over the weekend that affect New Zealand, with news all market eggs seem to be in the trade-talks basket.

The China-US trade talks are getting more intense. They are trying to wrap up a week of negotiations that have seen the two sides struggle to detail how to bridge their deep differences. But they are making progress and these talks seem likely to be extended.

Markets are betting that a trade-favourable outcome will result. They were up solidly (+0.5%) in the US in Friday trading, up spectacularly in Shanghai (+3.9%) and Hong Kong (+2.2%).

However, one US stock taking a beating is Kraft Heinz (-27%) who have just written down their brand value substantially. This is interesting because the company is one of Warren Buffet's biggest, latest investments. He released his latest Letter to Shareholders over the weekend and didn't mention that. But Berkshire Hathaway is reporting wild swings to its earnings now that mandatory mark-to-market rules apply - short-term rules that make little sense to a long-term investor like Buffett.

And some senior Fed officials are publicly mulling whether to stop draining its QE reservoir from its current US$4 tln level. If acted on, it would push the return to 'normalisation' back even further.

Further, one top Fed official said a flattening US yield curve in late 2018, which was close to being inverted, was "flashing red" about a deceleration in American economic growth heading into 2019, despite some solid data at the time.

Canadian retail sales came in lower in January and this was as expected. But the slippage was only kept from being larger by ok car sales; the rest of their retailing was weaker than expected although some of that was just lower petrol prices.

In Australia, the IMF has called for a levy on banks to help to cover the multibillion-dollar costs of running their deposit guarantee scheme. If implemented it is hard to see how this won't drive down term deposit rate offers which are already quite low. As you know, New Zealand doesn't have such a scheme although the RBNZ has signaled that it will look to review its position on that after it completes it's bank capital review.

The UST 10yr yield will start the week at 2.65%. Their 2-10 curve has held at +16 bps. The Aussie Govt 10yr is up +2 bps to 2.10%, the China Govt 10yr is unchanged at 3.15%, while the NZ Govt 10 yr is also unchanged at 2.21%.

Gold is a little softer, down -US$2 at US$1,328/oz.

US oil prices are marginally higher today, now just over US$57/bbl while the Brent benchmark is down to just over US$67/bbl.

The Kiwi dollar is starting the week at 68.4 USc, firmer since this time on Friday. On the cross rates we are holding at 96 AUc. Against the euro we are at 60.4 euro cents. That puts the TWI-5 firmer at 72.9.

After briefly pipping up over US$4,000, the bitcoin price has fallen sharply this morning, down -5.1% from where we left it on Saturday.. 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 ».