Here's our summary of key events overnight that affect New Zealand, with news that we have another disconnect between equity markets and economic data.
Today in the US is a public holiday, Memorial Day. That means Wall Street is closed. London has taken the day off as well for a "bank holiday" so its financial markets are closed as well. So financial market trading volumes have been very light in the past 24 hours and will be light again today. But the rest of the world is open and in business.
And yesterday, Shanghai's equity markets sprang to life, rising an impressive +1.4% on the day. Tokyo was also positive, up +0.3%. And they were followed by European markets overnight that recorded +0.5% gains.
It is not really clear about what is driving these gains at this time. Maybe it is the expectation of new stimulus.
That is because in China, industrial profits are still falling, a trend that started in January. They were down -3.4% in April from the same period a year ago and haven't been positive all year. This is in stark contrast to the +15% rise recorded in April 2018.
And in Hong Kong, their economy is being battered by the trade war. Exports fell for the sixth month in a row, down -2.6% year on year in April, while imports fared even worse, down -5.5%.
Turkey remains under pressure. Yesterday its central bank increased reserve requirements for foreign-exchange deposits by 200 basis points. This will withdraw more than NZ$6 bln of liquidity from their currency market and help them eliminate many smaller official dealers by making it more costly for them to keep forex deposits.
In Germany, their regulators are requiring banks to add a countercyclical capital buffer of 0.25% and they will have to start doing this from July. Authorities are concerned about stability risks from a pumped up domestic property market and a slowing economy.
In Australia, all the betting is for an official RBA rate cut next Tuesday. The Aussie property industry expects this to be a turning point for property prices.
The UST 10yr yield is stable at 2.32% as those big financial centres are on their break. Their 2-10 curve remains at +16 bps and their negative 1-5 curve is still at -21 bps. The Aussie Govt 10yr is at 1.55% and up +2 bps. The China Govt 10yr is also up +2 bps to 3.35%, while the NZ Govt 10 yr is up +1 bp to 1.77%.
Gold is unchanged at US$1,285/oz.
US oil prices are firmer today and are now at US$59/bbl. The Brent benchmark is at US$70/bbl.
The Kiwi dollar will start today little-changed in very light trading at 65.4 USc. On the cross rates we are also unchanged at 94.6 AUc. Against the euro we are similar at 58.5 euro cents. That leaves the TWI-5 at 70.4.
Bitcoin is still firing on all cylinders and this morning is at US$8,722 which is a gain of more than +8% overnight. Since the start of May, this crypto is up +70% and is now over NZ$13,000. 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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