Wall Street up on renewed trade talks claims; US data mixed; France & US agree on digital services tax; OECD growth slips again; UST 10yr yield at 1.53%; oil down and gold up; NZ$1 = 63.9 USc; TWI-5 = 69.2

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Here's our summary of key events overnight that affect New Zealand, with news that equity markets are thinking better news is around the corner, and bond markets decidedly sceptical.

Wall Street equities are up today by +0.8% so far as the US positions on trade at the G7 summit in France seem to have softened considerably. First that had a positive impact on European equities which were up a more cautious +0.4%, ignoring the Asian signals yesterday when Shanghai fell -1.2% and Hong Kong and Tokyo both dropped about -2% each.

Also improving the mood were US durable goods orders data for July which improved from June, and were up +3.1% from the same month a year ago. However, a closely watched subset of this data, for capital goods, showed no growth year-on-year, and a small slip from June.

The National Activity Index tracked by the Chicago Fed turned sharply negative in July. This resumed its negative trend that was briefly interrupted in June.

But going the other way, the Dallas Fed regional survey of manufacturing turned more positive in August, boosted more by production than new orders, although it too shows a worrying retrenchment in capital investment.

But so far, bond markets are not buying the idea that this is some sort of turnaround. All the US Treasury curves are now negative and getting more so.

One of the agreements reached in France was that the new French 3% digital tax will stay, but the [mostly US] companies levied will be able to deduct that tax from the impending OECD plan for taxing digital services under the BEPS framework.

In Germany, the closely-watched IFO survey has confirmed the negative mood in the business sector is getting worse, dropping for the 11th time in 12 months.

In China, new official interest rate mechanisms that have just been instituted are now to be used to control the floor rate for mortgages. Yes, the new system is more 'market-based' but it also allows the authorities to control how low mortgage rates can go. On average, Chinese borrowers pay 5.44% for home loans with the lowest rate at present being 4.84%.

One of the G7 claims came from the US Administration that "China very badly wants to make a [trade] deal". However, China has made no public signals like that so far; in fact their only public statement didn't sound positive at all.

Meanwhile, growth rates around the world keep on slipping. The OECD says the annualised rate in their group of 36 developed countries is down to +1.6%. The New Zealand growth rate was +2.7% in the year to March and we will get the June data on September 19.

The UST 10yr yield is unchanged at 1.53%. Their 2-10 curve is now negative by -1 bp. Their negative 1-5 curve is wider at -34 bps. Their 3m-10yr curve is still a negative -57 bps and down to where it was prior to the GFC. The Aussie Govt 10yr is at 0.93%, up overnight by +4 bps. The China Govt 10yr is up +1 bp to 3.08%, while the NZ Govt 10 yr has finally followed yesterday's drop and is down by -9 bps to 1.07%.

Gold is still high at US$1,529 and up +US$2 since this time yesterday.

US oil prices are lower again at now just under US$53.50/bbl. The Brent benchmark is also down to US$58.50.

The Kiwi dollar is marginally softer, now at 63.9 USc. On the cross rates we are down sharply at 94.3 AUc. Against the euro we are firmer at 57.6 euro cents. But the overall impact of these various movements leaves the TWI-5 unchanged at 69.2.

Bitcoin is now at US$10,315 and that is up +2.5% from this time yesterday. The bitcoin 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 ».