Here's our summary of key events overnight that affect New Zealand, with news hardened political positions on trade are biting in the real economy.
Firstly, Wall Street is taking a hammering today, down -1.6% so far. This follows European markets that were down all of that and more. Yesterday Asian markets were down as well with Shanghai down -1.4%.
And it is not only equities; international bond yields are under renewed pressure again.
This collective mood swing seems to be all about trade and the inability of anyone to get policy right. Trade wars are getting impossible to win. The US is being forced to splash cash subsidies on farmers just to keep them in business. Factories are slowing everywhere, and the once resilient services sectors are now barely expanding. It's getting more serious by the month.
May American PMI data revealed a sharp and unexpected slowdown in private sector output growth. Their factory PMI is now at a ten year low while at the same time their service sector is in a notable downshift in gear to a three year low. Worse may be to come as inflows of new business showed the smallest rise seen in ten years.
New home sales in the US fell too from recent highs, and a bit more than analysts were expecting. But they are still running more than +6% higher in April than in the the same month in 2018.
Following some tentative signs that the downturn in Japan’s manufacturing sector was turning for the better in April, flash PMI data for May revealed these were short-lived, as output and export orders fell at faster rates.
European factory PMIs are stagnant in May revealing their expansion is still very weak - in fact their factory sector is contracting.
The IMF is noting that consumers are the biggest losers in the US:China trade wars. This is borne out by reports from China where exporters say US consumers will ultimately end up paying more in the next round of tariffs by the Trump administration which is expected to cover smartphones, toys and bicycles.
Workers everywhere might be about to feel the effects of the trade war as well.
But it isn't all one-way traffic. With new data showing Australian companies increased their business activity in May for the first time in four months amid signs of a pickup in demand after a recent
soft patch. New orders rose at the fastest pace in 2019 so far according to their lastest PMI readings.
The dud PMIs have driven the UST 10yr yield down sharply again today, down 9 bps to now under 2.30% and that is a very big move. Their 2-10 curve is now at +17 bps while their negative 1-5 curve has pushed out to -23 bps in a fast shift. The Aussie Govt 10yr is at 1.53% and down another 8 bps since this time yesterday. The China Govt 10yr is up 2 bps to 3.34%, while the NZ Govt 10 yr has gotten off lightly so far, down 1 bp and now at 1.80%.
Gold is up US$10 this morning at US$1,286/oz.
US oil prices are being thrashed today, now just at US$57.50/bbl and a drop of almost US$4 while the Brent benchmark is just on US$67/bbl.
The Kiwi dollar is up marginally on a falling greenback to 65.2 USc. On the cross rates we up too at 94.5 AUc. Against the euro we are little-changed at 58.3 euro cents. The TWI-5 is now at 70.3.
Bitcoin is down 2.5% to US$7,761. 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 ».