Here’s my summary of the key issues from overnight that affect New Zealand, with news job growth is slowing in the US.
Americans left the labour force in droves last month, tempering expectations for a September interest rate hike from the Federal Reserve. Nonfarm payrolls rose 223,000, a smaller rise than in May, with construction and government employment unchanged, and the mining sector purging more jobs.
The unemployment rate fell to 5.3%, the lowest in seven years, but that was driven largely by 432,000 people leaving the work force, rather than more Americans finding work. Markets were most concerned the average hourly earnings declined.
Sweden’s central bank has taken its main policy rate deeper into negative and uncharted territory, citing growing economic uncertainty and worries about Greece. The Riksbank has cut its main interest rate by 10bp to -0.35%, in an attempt to stop deflation. Denmark and Switzerland also have negative rates.
China’s military is expected to expand its offshore presence. The National People’s Congress has passed a law that highlights the country’s need to protect its “overseas interests” through military action if necessary.
A Chinese naval expert has told media Beijing is determined to protect its oil lifeline at sea, hinting that it will continue to set up a network of offshore military supply depots at strategic ports around the world.
The IMF has released a report that’s expected to increase tensions between Athens and its creditors, ahead of Sunday’s referendum over whether Greece should accept a debt-relief package. The Greek prime minister says the report, which underlines the scale of Greece’s problems, is blackmail from the IMF and EU.
Back in New York, the UST 10yr benchmark yield has fallen sharply today to 2.38%.
There have also been some big falls in New Zealand swap rates overnight, especially in the 1 to 4-year terms, which are down 6 to 8bp.
ASB also pushed its1-year mortgage rate down to a new cycle low of 4.89% yesterday.
The price of oil remains low at US$57/barrel, while Brent crude has stayed at US$62/barrel.
The gold price has fallen to US$1,163/oz.
The New Zealand dollar remains weak following yesterday’s dire dairy price announcement. While the dollar’s down from this time yesterday, it’s rebounded slightly from yesterday afternoon’s lows. It’s at 67.2 US¢, 88.2 AU¢ and 60.6 euro cents. The TWI-5 is 71.3.