Dairy prices slide; NZ happier; ethics move fails; China PMI rises with US; ANZ retreats further in Asia; Aussie house prices rise +11%; UST 10yr 2.46%; oil down, gold up; NZ$1 = 69.4 USc, TWI = 76.3

Here’s a special holiday update of some key events and data you may want to know about today.

First up, today’s dairy auction has brought a second consecutive drop in prices. They are down -3.9% today in USD on top of the -0.5% we had on December 20. Worse, the key wholemilk powder price is down -7.7% and that comes after the -0.7% fall two weeks ago. None of this has had a noticeable effect on our exchange rate. In NZD, the overall prices are down -4.1%.

And then we have the results from the World Happiness Report for 2016. New Zealand ranks #8 out of the 157 countries surveyed, and that is a gain of one place this year as we pushed on up passed Sweden. Our slightly lower GDP-per-capita score is more than made up by our ‘healthy life expectancy’ score and our ‘perceptions of corruption’ score. In fact, we have managed to stay one place ahead of Australia for the second year in a row. (We were 13th in 2014 so our gain over tow years has been pretty impressive.) We are not a nation of grumpy people (despite what you may see in our comment section below).

In the US, and in what should not come as any surprise from a Trump election win, House Republicans, overriding their top leaders, voted to emasculate the power of an independent ethics office set up in 2008 in the aftermath of corruption scandals that sent three members of Congress to jail. The move to kill the effectiveness of the Office of Congressional Ethics was not made public until yesterday, when Representative Robert W. Goodlatte, Republican of Virginia and chairman of the House Judiciary Committee, announced that the House Republican Conference had approved the change. There was no advance notice or debate on the measure. But the backlash has been strong, and the move was cancelled this morning (even though Trump himself said the ethics rules were “unfair”.)

It is not often you see data like this from China, but today’s private PMI factory survey has come in more positive than the official one. It shows their manufacturing sector expanding to a 47-month high in December, with the index coming in at 51.9 in December, up from 50.9 in November. The American survey also came in very positive, up to 54.3, a 21 month high. (American construction spending is rising too.) Around the world, factory activity is trending up into a stronger expansion phase.

ANZ has sold its 20% stake in Shanghai Rural Commercial Bank for A$1.8 bln, as part of its broader retreat from its Mike Smith drive to own Asian assets. China COSCO Shipping and Shanghai Sino-Poland Enterprise Management Development were named as the purchasers in the deal. ANZ invested a total of A$568 million to acquire the stake in 2007.

Australian house values rose at their fastest pace in seven years in 2016. The average dwelling value in the state capitals rose 10.9% compared to 7.8% in 2015, according to data released by CoreLogic. That’s the biggest increase since 2009.

By the way, did you make a New year resolution to go off grid? Want to go all the way and delete yourself from the internet? Here one way to do this.

The English Telegraph website is quoting the OECD’s chief economist Catherine Mann warning of house prices that are just too high. She is reported as saying that a “number of countries” had “very high” commercial and residential property prices that were “not consistent with a stable real estate market”. And the OECD chart that accompanied the story has New Zealand with the highest prices relative to 2002 of the seven countries surveyed.

In New York, after a brief push higher the UST 10yr yield has settled back to about the same level we saw yesterday, now at 2.46%.

The US benchmark oil price is now down more than -US$1/bbl and now at US$52.50 a barrel, while the Brent benchmark is just on US$55.50.

The gold price is higher, up +US$10 and is now at US$1,161/oz.

The New Zealand dollar is pretty much unchanged and still at 69.4 USc. On the cross rates it is stable at 95.9 AU¢, and 66.6 euro cents. The TWI-5 is still at 76.2.

The easiest place to stay up with event risk over the holiday period is by following our Economic Calendar here »

Daily exchange rates

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for(i=0;i

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