Here's our summary of key events overnight that affect New Zealand, with news largely about international trade which is indicating a risk-off mood.
The Americans released their March trade figures for goods and services and that showed a wider overall deficit on -US$50 bln for the month, but a narrower deficit with China, down to -US$20.7 bln as imports slowed and exports rose with them. But you may recall we reported China's data yesterday which was for April and that later data seems to show the reverse trends. However, the big point is that whatever the US deficit level, it is not overly significant in the American economy, being just -2.9% of US GDP and stable. The issues are political, not economic.
Canada's trade deficit narrowed as exports rose faster than imports, which also rose.
In China, consumer inflation hit a six-month high in April, driven mainly by a faster rise in food prices, especially pork prices. They were up +2.5%, a rise from +2.3% in March.
And China's new loans and overall borrower debt rose by less than analysts estimated last month, bolstering expectations that their central bank will have to loosen monetary policy again as economic growth slows and the risk that their trade dispute with the Americans will intensify.
Global food prices rose in April to their highest level in almost a year, led up by meat and dairy prices. The UN is noting that global meat production is falling, primarily because of African Swine Fever in pigs in China (equivalent to a foot & mouth disease outbreak, but in pigs). This will cause upward pressure on prices for other meats.
In Europe, two banks are in trouble. In the UK Metrobank is facing a capital crisis. And in Italy, Banca Carige is under existential pressure after a major potential funder withdrew its intended support. It is a bank that has been ailing for some time.
One curve many bond traders watch is the the yield on 10-year US Treasury notes which have now fallen below the 3-month bill yield. This is unusual, but is the second time this has happened in 2019. If it does correctly foreshadow a recession, one famous trader is warning that the resulting bond losses will be "massive".
In Australia, it is now only about a week until their Federal election. It will be close. Today, their opposition Labor Party released its campaign budget costings and that shows it plans more spending, bigger tax cuts, and the closing of many tax loopholes for "the rich" (or what they call, "the big end of town"). All this, costed by the Australian Treasury, is expected to result in larger surpluses than the current government is projecting.
Overnight European markets fell very sharply, with most down more than -2%. Wall Street is currently trading down -0.5% so far today after starting much lower on the EU signals. But a brief earlier attempt at a rally on some trade news fluff is petering out and the decline is setting in again. Yesterday, Shanghai closed down -1.5%.
The UST 10yr yield is now at 2.46%, and that is -3 bps lower in trading today so far. Their 2-10 curve is little-changed at +19 bps and their negative 1-5 curve is wider at -11 bps. The Aussie Govt 10yr is at 1.72% which is down -2 bps since this time yesterday, the China Govt 10yr is at 3.33% and -3 bps lower, while the NZ Govt 10 yr is at 1.86% and also -3 bps lower.
Gold is up +US$4 at US$1,284/oz.
US oil prices are slightly lower today, now just at US$61.50/bbl while the Brent benchmark is just on US$70/bbl.
The Kiwi dollar will start today at 66 USc. On the cross rates we are a touch higher at 94.3 AUc. Against the euro we are unchanged at 58.8 euro cents. That puts the TWI-5 up only marginally at 70.6.
Bitcoin is up +2.9 again today taking its price to US$6,057 and its highest since mid-November 2018. This run-up has added more than +17% in May alone. 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 ».