sign up log in
Want to go ad-free? Find out how, here.

G20 brings 90-day trade ceasefire; Canada GDP growth lower; Japan data up; India growth lower; UST 10yr at 2.99%; oil and gold down; NZ$1 = 68.8 USc; TWI-5 = 73.4

G20 brings 90-day trade ceasefire; Canada GDP growth lower; Japan data up; India growth lower; UST 10yr at 2.99%; oil and gold down; NZ$1 = 68.8 USc; TWI-5 = 73.4

Here's our summary of key events over the weekend that affect New Zealand, with news of a lull on the trade war skirmishes.

In Argentina, the Chinese and Americans agreed a short 90-day truce in their trade war. The Americans agreed to not raise any more tariffs while further talks take place. Exactly what are the next steps is somewhat unclear and both sides talked platitudes and past each other. But the G20 hasn't erupted into chaos, and that will be viewed as a 'success'. Interestingly, the Americans talked of a 'tremendous success' but have not made any formal statement of substance. No-on really thinks this is enough to resolve their deep divisions.

However, Wall Street will no doubt enter a relief rally, buoying stocks exposed to trade. This will come on top of the rally triggered by an increasingly dovish Fed that began on Friday and saw the S&P500 end the week up +3.3% and back in positive territory for the year. By the way, Wall Street will be closed on Thursday NZT Monday (tomorrow) as a mark of respect for President George HW Bush. Another reason to bounce when it opens is an unexpectedly strong regional survey.

Canada's final GDP growth data for Q3 2018 came in lower than expected at +2.1% pa and down sharply from the +2.9% growth in Q2.

Japan's housing starts unexpectedly rose in October, taking them to a +950,000 annual rate and a rare, if only still minor, year-on-year gain. And their industrial production rose +2.9% year on year, also higher than expected.

In China, their official factory PMI survey indicates that this sector has stopped expanding. The index fell to 50 in November and the lowest this index has been since mid 2016. Expect a rally on Shanghai markets when they open today however on the trade news.

India's growth slowed to +7.1% pa in Q3 2018, a sharp drop from +8.2% pa in Q2.

In Australia, iron ore prices are down more than -5% in the past two weeks, and the outlook through 2019 isn't particularly bright.

On Friday, the ASX200 took a bath, down -1.6% on the day. That means it is down -6.5% for 2018, and down a remarkable -10.8% since the beginning of September. Investors are sceptical of Australia's prospects, and particularly negative about how public policy is [not] being developed in their highly partisan environment.

The UST 10yr yield is starting the week at 2.99% and a net dip of -6 bps for the week, its lowest since mid September. More importantly, their 2-10 curve has slipped -4 bps to now be under +20 bps and its lowest since August, and continuing a worrying signal with a new downward trend that started in October. The Aussie Govt 10yr is at 2.59% (down -5 bps over the week), the China Govt 10yr is at 3.38% and down -4 bps for the week, while the NZ Govt 10 yr is at 2.59% and down -11 bps over the week. New Zealand swap rates fell this week down -4 to -8 bps although compared with a month ago we are up marginally.

Gold is down -US$4 at US$1,222/oz.

US oil prices are very weak again today and at new low levels at just under US$51/bbl. The Brent benchmark is now just under US$59.50/bbl. These prices are a -20% drop in November, this commodity very much in a bear market. As these prices are unchanged in the past week, that suggests low prices are bedding in. Oddly, the US rig count is still holding at its 200 week high despite these very low prices. And US crude production has surged to a new all-time record.

The Kiwi dollar is starting the week firmer at 68.8 USc, which is a whole +1c up from this time last week but back exactly where it was two weeks ago. On the cross rates we are noticeably firmer at 94.2 AUc, and at 60.9 euro cents. That puts the TWI-5 at up to 73.4 and its highest since April.

Bitcoin is now at US$4,088 which is an +11.5% gain for the week, a week when heavy volatility set back in again. This rate is charted in the exchange rate set below.

This chart is animated here.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».

Daily exchange rates

Select chart tabs

Daily benchmark rate
Source: RBNZ
Daily benchmark rate
Source: RBNZ
Daily benchmark rate
Source: RBNZ
Daily benchmark rate
Source: RBNZ
Daily benchmark rate
Source: RBNZ
Daily benchmark rate
Source: RBNZ
Daily benchmark rate
Source: RBNZ
End of day UTC
Source: CoinDesk

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

22 Comments

Struggling to be anti Trump today?

Up
0

Ohh, pick me, I can put a spin on this.

> In Argentina, the Chinese and Americans agreed a short 90-day truce in their trade war. The Americans agreed to not raise any more tariffs while further talks take place.

I can rephrase that.

> In Argentina, America has blinked first, promising no additional trade tariffs take place while further talks take place.

I'm totally talking out of my ass here though. Whether or not China has put the same promises on the table or not, I have no idea.

Up
0

Trump got tough on Fentanyl and won,

"the decision means that "people selling fentanyl to the United States will be subject to China's maximum penalty under the law."

He also got China to buy lots more from the USA,

"Trump agreed to hold off on plans to raise tariffs Jan. 1 on $200 billion in Chinese goods. The Chinese agreed to buy a “not yet agreed upon, but very substantial amount of agricultural, energy, industrial” and other products from the United States to reduce America’s huge trade deficit with China, the White House said.

In another long-sought concession to the U.S., China agreed to label fentanyl, the deadly synthetic opioid responsible for tens of thousands of American drug deaths annually, as a controlled substance. And Beijing agreed to reconsider a takeover by U.S. chipmaker Qualcomm that it had previously blocked.

Up
0

Thankyou. I was going to say this.
And their threat to increase tariffs remains. Delayed by 2 months only.

Up
0

US Dairymen see milk powder to China as great business! In scale.

https://www.salon.com/2018/12/01/while-small-dairy-farms-shut-down-this…

Up
0

In collective noun news!

https://www.whitehouse.gov/briefings-statements/remarks-president-trump…

And
https://www.whitehouse.gov/briefings-statements/statement-press-secreta…

On Trade, President Trump has agreed that on January 1, 2019, he will leave the tariffs on $200 billion worth of product at the 10% rate, and not raise it to 25% at this time. China will agree to purchase a not yet agreed upon, but very substantial, amount of agricultural, energy, industrial, and other product from the United States to reduce the trade imbalance between our two countries. China has agreed to start purchasing agricultural product from our farmers immediately.

Up
0

China is a major buyer of our dairy products. Will this mean that we may lose market share to the US?

Up
0

No. So the tariffs he was going to put on are now on hold. So that's a nothing...
And a big fail on climate.
https://www.abc.net.au/news/2018-12-02/trump-xi-agree-to-trade-war-ceas…

Up
0

although the US leads the world in emission reductions

https://www.forbes.com/sites/simonlack/2018/08/23/guess-whos-most-effec…

Any renewed burning of coal in the US is coal that would have been burnt somewhere else (probably china) anyway, and probably less efficiently and then with shipping emissions to be added. Steel for instance.

Up
0

and Germany fails, the country that wanted to lead the way.
With satellite technology weather forecasting is done with%71 percent accuracy while Weather Action owned by Piers Corbyn using sun spot activity ,has a long range accuracy rating of %85. They are meant to include NZ next year.

http://www.weatheraction.com/pages/pv.asp?p=wact37

Up
0

interesting to see the local mayors and nationals response to this, they both have pandered more to overseas owners than locals in this town
Central Otago-Lakes District’s average asking price fell to $857,011 in November – which was an 18.9% fall as compared to October, according to Realestate.co.nz’s latest data.
New listings were also down (by 4.6%). There were 247 listings in November, as compared to 236 in October at the much higher average asking price of $1,057,019.
Realestate.co.nz spokesperson Vanessa Taylor says it could be that in the run up to the foreign buyer ban there was an influx of top end properties that owners were eager to get across the sold line.

https://www.landlords.co.nz/article/976514020/queenstown-price-chill-po…

Up
0

Queenstown can be a strange property place!
I recall during one recent 'downturn' that 4 properties sold in one particular month, and there were 53 agents in town at the time. That went on for long enough that those who'd gone into the 'industry' for something to do, left....and not just the industry.

Up
0

Wall St will be closed Monday or Wednesday ?

Up
0

You are right; it should be Wednesday EST (Thursday NZT). Corrected now.

Thank you.

Up
0

Did ya see the petulant child meet with Xi and the happy chappie glad handing of the killers oiling the works at the G20... this speaks volumes to me about where our crazy World is going with these meetings. Reading between the lies and the lines, it is business as usual......unfortunately.
Killing people over oil, and arms and whatnot 'Goods" is perfectly OK...as long as money changes hands...and sticks to my palm....lets shake on it.

Up
0

Trump was never going to let the death of one man stand in the way of billions of dollars in arms deals, jobs for Americans and oil. The media keeps on dragging up the story 2 months after his death, Trump is just waiting for the media to drop it and move on Perhaps your shouldn't criticise someone who can afford a private jet and a hit squad.

Up
0

I thought the US was self-sufficient in oil?

Up
0

They are.

Up
0

Some people will Bitch about Petrol Taxes and fight at the Arch De Triomphe...for what is right for the people of their Nation....even while Macron is taking others to task..(which I admire him for.)....he is avoiding issues back home....as do all our so called...Leaders....in their quest for """""Free Trade""""

Some people fuel hatred and others fear the consequences. These "Petrol Heads" and so called "Leaders" think they are immune.....Well they are not...Not in my opinion....We had wars to end all wars....where citizens fought for Freedom......now we have get out of jail free cards for certain Killers....who certainly are ......"aware of the facts"...

I know the big picture is to turn a blind eye, but surely we need to ensure...no more.......means....."No More".

Armistice Day may be a Trump damp squib.....but it is not if a true...Patriot.....Nor is turning a blind eye to others.....'War Crimes of humanity."

Peace be with you....Mate.........should be a 'World Wide Web acknowledgement.....acknowledged by all....no matter what Religion, nor State.....they are in.

But that they must mean it.....or die in the attempt....and reporting "Facts" by Journalists is one of the main ones. I admire some journalists for.....around this fair and ever changing World.

"Freedom is just another word, for nothing left to lose" as we fix this nutty World...if I may coin a phrase.

And Free Speech is just one....as well as Free Trade....the words on everyone's...lips..paying Lip Service...today.

Up
0

I wonder if NIWA could show the soil moisture averages split between El Niño, La Niña, and ``normal'' years?

Up
0

Amazing how only cnn see this as a negative. What does Trump have to do toget any credit. He stood on a platform of balancing trade with china and this is a step in the right direction

Up
0

Trump must remember, China must not be seen losing FACE in the trade negotiations, the rest of the world is watching, China is communist, some people forget about this and they will play for time,

Up
0