Here's our summary of key events over the weekend that affect New Zealand, with news election results are dominating our news.
The Australian election result defied the polling earlier in last week and will have some interesting consequences. Firstly, the incumbent centre-right won, extending its term. One important reason was coal mining in Queensland. Pro-coal forces hurt the climate-sensitive opposition and this huge mine will now almost certainly go into production, shipping vast amounts of thermal (low quality) coal to India. Secondly, the independent magnate who spent $60 mln trying to 'buy' a Senate seat lost. And thirdly, the hard-right icon of the Liberal Party, former prime minister Tony Abbott, pointedly lost his seat to an independent candidate and is now out of Parliament. Another infamous candidate, Fraser Anning, was also dumped. Exit polling suggests that a crucial part of the electorate didn't actually make up its mind until they had the voting papers in their hand.
More of the same is likely in Australia. This is not a reforming Government. Banks are unlikely to face further sanctions. The big June tax cut will happen, giving an almost immediate fiscal stimulus. Eyes will be on the Aussie dollar when it opens this week in a few hours.
And in India, exit polls suggest that incumbent right-wing nationalist prime minister Modi will win a second term.
In Washington, the US has lifted tariffs on steel and aluminium products from Canada, and is expected to do the same for Mexico. These tariffs were imposed by Washington just last month on grounds of 'national security', highlighting the silly gamesmanship behind them.
And Washington is also 'delaying' tariffs on cars which were aimed at allies Japan and the EU, in a back-track that may allow it to concentrate on the failing China trade talks.
Meanwhile, China has canceled some large pork orders with the US, adding pressure to American farming interests which are already reeling from the loss of some major grain markets. The rising US dollar won't be helping them either. China will need alternate sources of meat protein.
China is digging in, now saying more trade talks with the Americans will only happen if they are 'meaningful'.
A senior China politburo member has said the trade war could slice as much as -1% from China's growth this year. He indicated this was an acceptable price to pay for a long-term winning position.
One US policy that has bi-partisan support in Washington is its push-back on Chinese tech and its perceived capacity to be a security issue. The recent ban on Huawei is the icon example. But in Europe, they don't see the threat in technical terms and are pushing ahead and allowing Huawei to win 5G infrastructure contracts there. It is a direct snub to Washington.
Meanwhile, Chinese house buyers are bidding up local prices again, especially in their main cities. They are up as much as +20% in some in a year, up +10% to +15% in many others. Beijing is cooler, up just +3.5%, but recall, there is a clamp on Beijing's population and it is being administered to fall.
The UST 10yr yield was marginally lower on Friday to 2.39%, but that is -7 bps lower in the week. Recall it fell -7 bps in the previous week too. Their 2-10 curve is now at +19 bps but their negative 1-5 curve is at -16 bps. So far there has been no assault on the UST yields from China as part of their retaliation. The Aussie Govt 10yr is at 1.64% and down -10 bps over the week. The China Govt 10yr is down -3 bps in the week to 3.28%, while the NZ Govt 10 yr is down -3 bps this week, now at 1.82%.
Gold was down -US$10 on Friday to US$1,276/oz.
US oil prices are soft today, now just under US$62.50/bbl while the Brent benchmark is just under US$72/bbl.
The Kiwi dollar is lower against a rising greenback this morning at 65.5 USc and that it its lowest level since November 2018. On the cross rates we little changed at 95.1 AUc although the Aussie dollar may firm when it opens this morning on the election result.. Against the euro we are similar at 58.4 euro cents. That all makes the TWI-5 slightly lower at 70.3.
Bitcoin is on a roller-coaster. After falling to US$7,034, it rose to over US$8,300, then back down to US$7,234, and now it is back up to US$7,986. It is a wild market with schizophrenic price signals, pure crazy speculation..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 ».