Here's my summary of the key events overnight that affect New Zealand with news of renewed efforts to get the Trans Pacific Partnership ratified again.
At the upcoming APEC meeting in Vietnam, Japan and Australia are making a new push at getting the TPPA over the line, without the US. New Zealand has defaulted its influence at this meeting, but if the effort is successful, we stand to benefit greatly. And don't forget, the General-Secretary of APEC is Alan Bollard. And it is instructive that the US President left Japan for the meeting empty-handed on trade. The chances of a TPPA-11? Probably better than 50/50. The chances of the new Government signing up anyway are high.
The head of the New York Fed has 'cautioned' Congress and the White House on the dangers of rolling back financial sector regulations that were put in place to shore up the banking sector after the GFC. But, as if to acknowledge they won't listen, he also announced he is quitting the post. It's an unexpected, unexplained early retirement.
China announced that it had a current account surplus of +US$37 bln in the September quarter, taking its total 2017 current account surplus to +US106 bln. But in its Capital account the 2017 surplus was just +US$1.8 bln. These numbers are far, far less than its good trade surplus because China runs large services deficits, and large capital account deficits. Some strident Western politicians have risen to power misrepresenting this data. Populism allows shouters to ignore inconvenient facts.
And staying in China, reports are emerging that the major Western credit rating agencies are now close to approval to operate and rate domestic Chinese corporate bonds. The Chinese system has failed with almost half of all such issuance now rated AAA by local ratings agencies. The situation has zero credibility and the Chinese know it. And they know the situation is dangerous for them. A change of policy has been signaled by the PBoC and it will be a huge coup for S&P, Moody's and Fitch. But it will come with intense pressures from Beijing. We will know how they handle that pressure with how they rate Chinese sovereign bonds (currently they are rated A+ with a negative outlook).
The recently-released Paradise Papers show that HSBC threatened to sue ANZ for allegedly handing over customer details to the Australian Tax Office without telling their tax-cheating clients first.
In New York, the UST 10yr yield is down -1 bp today at 2.32%.
The price of crude oil has jumped by more than +$1.50 today and is now just over US$57 / barrel, while the Brent benchmark is just under US$64. An insider 'coup' of sorts in Saudi Arabia, plus instability in Venezuela are both adding risk premiums to crude oil.
The price of gold is unchanged at US$1,269 oz. The bitcoin price is now at US$7,093, down -4% on the day.
The Kiwi dollar is little changed again today. We are now at just under 69.1 US¢. And on the cross rates we are at 90 AU¢, and against the euro at 59.6 euro cents. That puts the TWI-5 index still at 72.5.
If you want to catch up with all the changes yesterday, we have an update here.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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