Here's our summary of key events overnight that affect New Zealand, with news other markets are having a hard time absorbing fast-rising American interest rates.
On Wall Street today, the bond selloff continued with yields rising another +5 bps and the UST 10yr is now at 3.20%. That has shifted up almost +15 bps in a week and was just too much for equities which have dropped sharply today, with the S&P500 down -1.3% and the NASDAQ down an eye-catching -2.2%. These are falls like we have been seeing in Hong Kong recently, and they closed -1.7% lower yesterday. Things look grim for what might happen on the Shanghai market when it reopens on Monday after their week-long holiday.
In the US there was no new data of significance, although initial unemployment claims are still running low. All eyes are now on tomorrow's non-farm payrolls report and analysts now expect that to show a gain of +184,000 and that would not meet the narrative of a booming labour market. OK, but not great, and well below trend.
Thailand and Indonesia are facing a liquidity squeeze and challenges in refinancing debt, the World Bank says. It is not saying these countries are facing a crisis now - mainly because their foreign debt obligations are low - but it is saying that rising protectionism and increased financial market volatility are likely to hurt their economic prospects significantly. The World Bank says their floating currencies are a strength, enabling them to buffer shocks.
In China, the African Swine Fever outbreak is spreading in their important pig industry. This is the pig equivalent to foot & mouth disease for cattle. It is serious for them, and more so because it looks like they can't seem to control the spread. Official numbers are still small but under-reporting will be a major issue, complicating matters. It is another big knock to their national food safety systems.
A UN agency is reporting that global food commodity prices fell in September due to growing inventories of key staples. This is the sixth consecutive monthly fall and their overall food price index is now back to a level last seen in September 2016. Basically, we are producing more food than we are consuming.
In Australia, their departing Inspector General of Taxation has called for increased oversight of the Australian Taxation Office saying there is too much power being concentrated in one individual, the ATO Commissioner. The claim is that their tax authority is becoming too arbitrary, and makes mistakes in at least 5% of cases it reviews.
The UST 10yr yield has risen again to 3.20% and is up another +5 bps. Their 2-10 curve has pushed out to almost +32 bps. The Aussie Govt 10yr is also sharply higher at 2.71% (up +7 bps), the China Govt 10yr is at 3.66% (unchanged due to the holiday week there and possibly due for a big catchup change on Monday), while the NZ Govt 10 yr is at 2.65%, and up +4 bps.
Gold however is little changed at US$1,198/oz in New York. The World Gold Council reports that ETFs are still dumping their gold holdings.
US oil prices are down sharply today, down by about -US$2 and now just on US$74.50/bbl. The Brent benchmark is now just over US$84.50/bbl.
The Kiwi dollar is still declining and down by another -½c at just on 64.8 USc. On the cross rates we are little changed at 91.7 AUc, and at 56.3 euro cents. That pushes the TWI-5 down to 69.1.
Bitcoin is little higher at US$6,554 and a gain of +1.2% since this time yesterday. 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 ».
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