US economy 'performing well'; Fed still has big-bank risk issues; China stocks soar; more VW cheating; iron ore shipments fall; UST 10yr yield 2.20%; NZ$1 = 65.8 US¢, TWI-5 = 71.1

Here’s my summary of the key events overnight that affect New Zealand, with news that even more revelations about cheating are emerging from VW.

But first, American employers maintained a steady pace of hiring in October and a jump, especially in new orders, buoyed activity in the services sector, suggesting their economy was ready for a first interest rate hike from the Fed in December. Reinforcing the theme was a smaller US trade deficit in September, the smallest in 7 months, with exports up and imports down. Even Janet Yellen said the American economy was ‘performing well’ and ready for the start of rate hikes.

At the same Congressional hearing, she said that while the state of big US banks has “strengthened considerably” since the crisis, they still have “substantial compliance and risk-management issues”.

China’s stock markets soared yesterday with the Shanghai index up more than +4% and the Shenzhen index up +5%. But the move was prompted by official comments published yesterday – that were apparently made five months ago.

In Europe, and ironically ahead of the UN climate conference in Paris, the pressure on Volkswagen has been raised to new levels after it was revealed that the carmaker has also cheated on CO2 emissions and fuel economy results. The crisis at one of the world’s largest industrial enterprises now threatens its very existence. The crisis is also not helping Europe’s reputation for advanced engineering.

In Australia, their exports of iron ore to China are fading fast; in fact, one US rival said that both BHP and Rio are in denial about the implications.

In New York today, the UST 10yr yield benchmark has held at 2.20%.

The US benchmark oil price has also slipped today, now at US$46/barrel, and the Brent benchmark is at US$49/barrel. American crude oil stocks jumped last week. Ethanol production is soaring too despite low prices. Fuel everywhere.

The gold price also fell overnight, now at US$1,112/oz.

The New Zealand dollar starts today about 1c lower on a stronger US dollar and reaction to both lower dairy prices and the weaker local jobs report yesterday. It is now at 65.8 US¢, at 92.1 AU¢, and at 60.6 euro cents. The TWI-5 is at 71.1.

If you want to catch up with all the local changes yesterday, we have an update here.

The easiest place to stay up with event risk today is by following our Economic Calendar here »

Daily exchange rates

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for(i=0;i

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