Markets realign as Fed not seen cutting soon; Vancouver house sales slump, China unsure of trade deal; Hong Kong growth low; ECB boss speculation; UST 10yr 2.55%; oil and gold down; NZ$1 = 66.2 USc; TWI-5 = 71.1

Markets realign as Fed not seen cutting soon; Vancouver house sales slump, China unsure of trade deal; Hong Kong growth low; ECB boss speculation; UST 10yr 2.55%; oil and gold down; NZ$1 = 66.2 USc; TWI-5 = 71.1

Here's our summary of key events overnight that affect New Zealand, with news of a range of changes on the horizon.

A second Presidential pick for a policy job at the US Fed has 'withdrawn' after a lack of Republican support.

Global equity markets are lower for a second straight day and both the greenback and bond yields are rising as the Federal Reserve was now seen as less likely to cut American interest rates in 2019, following consideration of all the comments and data released by the Fed yesterday. And the Presidential challenge seems to have been rebuffed - and quite easily, it turns out.

American worker productivity rose at its fastest pace in more than four years in the first quarter of 2019.

In Vancouver, there were just 1,829 residential sales in April, down almost -30% from the same month a year ago, itself a month on the slide. It's almost a 25 year low. April sales are running -43% lower than their 10-year average rate. Prices are dropping too.

China may be signaling that the US:China trade talks could be at "an impasse" and that no deal may emerge.

Hong Kong has just reported its Q1-2019 growth and it is meager, just +0.5% pa. The global trade hub is finding the going tough during the economic battle between the Americans and China.

There are news reports circulating that "central banks are ditching the US dollar for gold" but updated data from the World Gold Council suggests otherwise. Central banks bought the smallest volume in Q1-2019 in a year. And the buying is the usual dictatorships. This data also shows that supply into the market remains strong at 1,150 tonnes in the quarter, core demand was only 908 tonnes. It needed that dictator-buying to bring it nearish to a balance. The price of the yellow metal fell -US$12/oz today after this data was published and after that fall is actually below the price at the start of 2019 and -2% lower that this time a year ago. (In New Zealand dollars it is up +3% in a year, but that says more about the currency markets than the gold market.)

In Europe, "what the Germans think" - already important - might become even more so. ECB boss Mario Draghi is due to retire soon and the head of the Bundesbank could become the first-ever German official to head up the institution. And recently he has been warning of the risks of delaying a 'return to normalisation', something Draghi has been slow at doing.

And in the UK, their central bank chief said overnight that people there should prepare for more interest rate rises than they are currently assuming. He said a resolution to the Brexit impasse, and if their inflation and growth continue to pick-up as they predict, then more increases are likely.

The UST 10yr yield is now at 2.55% and up +6 bps from yesterday. Their 2-10 curve is now at +21 bps and their negative 1-5 curve is at -6 bps. The Aussie Govt 10yr is at 1.79% and up +3 bps, the China Govt 10yr is unchanged at 3.42%, while the NZ Govt 10 yr is up +3 bps at 1.91%.

Gold is down -US$12 from yesterday and now at US$1,272/oz.

US oil prices are lower today and by nearly -US$2, now just under US$62/bbl while the Brent benchmark is just under US$71/bbl.

The Kiwi dollar will open today little-changed at 66.2 USc. On the cross rates we are now at 94.5 AUc. Against the euro we are at 59.2 euro cents. That leaves the TWI-5 to 71.1.

Bitcoin is at US$5,392 and that is +1.5% higher than this time yesterday. 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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USD 
NZD
End of day UTC
Source: CoinDesk

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8 Comments

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I think most people in the rest of the world tend to see Gold as real money and the local currency as somewhat suspect. Certainly in India and China, but also in Germany:
https://www.zerohedge.com/news/2019-04-28/vast-gold-hoards-held-germanys...

The ECB has pretty much destroyed the Euro bond markets since they are almost the only buyer at current yields. If you can switch funds from a deposit account paying no interest to gold in the vault at your local bank, as it appears you can in Germany, and official (ie probably falsified, sorry, cough, possibly underestimated) inflation is at 2%, which would a sensible German choose?

Our Futures in Gold....and so are many things....if you are well........Red.

https://finviz.com/futures.ashx

Hmmmmm... gold price fading away. Bitcoin up 70% in less than 4 months. Hmmmmmm

http://bitcointicker.co/stamp/btc/usd/6Mth/

Don't you mean Bitcoin down 15% in 6 mths!

Sure, although gold was doing very nicely in 2018 until around that point or so

Just pointing out your bitcoin cherry picking as usual. Don't really care about the price of Gold, a mostly useless shiny metal. Makes pretty jewelery (but I prefer silver) , and good for plating electrical connections.

New vehicles sold is the lowest of any month in four years.
Waiting for better and cheaper EVs, perhaps?

Nah, Musk waiting on a new Convertible, so he can keep the EVs flowing.....that is if the Banks will keep funding the Buying binge.

https://www.marketwatch.com/story/tesla-to-raise-money-through-new-stock...