Here’s my summary of the key events from overnight, with news the Chinese are increasingly concerned at their debt levels.
But first in the US, final data confirmed a sharp fall in labour productivity in the June quarter (something we have reported earlier), but the reason is that unit labour costs are rising fast there, up +4.3% in the past year, +3.7% of which was due to a rise in pay and benefits. And part of that is from a growing skills gap.
All eyes will be on tomorrow’s release of the August non-farm payrolls report in the US. This will be key to how the Fed deals with its interest rate settings on September 23.
Soft American car sales may be a reason. GM’s domestic sales were down -5.2% in August while Ford was down -8.2%. Chrysler was up however by +3%. Unsurprisingly perhaps, given their reputation woes, VW-US saw a -9% fall.
China is playing hard-ball with Australia, banning one dairy company supplying fresh milk products and putting 41 others ‘under supervision’. The claim is that they are selling diseased milk, something vigorously rejected by the dairy companies involved.
And staying in China, their National Institution for Finance and Development issued a report overnight raising alarm over the growth of debt in the country. Economists at a forum releasing the report said China needed to rein in the “barbarous growth” of the debt and reverse the “poisonous” obsession with borrowing from banks. Estimates of China’s leverage ratio vary but there is consensus that the corporate sector, especially bloated state-owned enterprises, are the riskiest borrowers. While they can chronicle the rise and heady levels, the report writers could not offer any easy solutions to the problem.
We have been reporting on driverless cars recently. Today brings news of the launch of a driverless tractor.
In New York, the UST 10yr yield is unchanged at 1.57%.
The oil price is down again today with the US benchmark price now just over US$43 a barrel, while the Brent benchmark just over US$45.50 a barrel. Over the past few days, this represents quite a retreat in the oil price. Despite this, China has raised fuel prices today.
The gold price is up marginally, now at US$1,312/oz.
The New Zealand dollar is essentially unchanged from this time yesterday. It’s now at 72.7 US¢, 96.4 AU¢ and 65 euro cents. The TWI index is still at 76.2.
If you want to catch up with all the local changes from yesterday, we have an update here.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».