Here’s our summary of key events overnight that affect New Zealand, with news the EU has launched a new framework to ‘protect investors’.
But first, there is more evidence today of improving US factory prospects, with another index up substantially to 59.7 last month, the second-highest reading in six years, from 58.2 in November. It was also powered by strong new order levels both from domestic sources and exports.
And that was backed up by strong construction spending data our overnight as well.
This data has helped Wall Street extend its New Year rally with all three main indexes up solidly.
But relatively unnoticed is the struggles car makers are having with their sales; December sales were ahead of expectations, and unsold inventory is lower, both good things. But overall projections for 2018 are lower than for 2017, and discounting is rife. Those December sales were only held up by good sales at GM and Ford. Chrysler-Fiat reported a -11% drop, Toyota a -8.3% drop, Honda a -7% fall, and Nissan a -9.5% decline. Expectations aren’t being set very high for 2018.
Today’s release of the latest Fed minutes was a tame affair, bringing no surprises or special insights.
In China, they are rolling out retail stores and restaurants without checkout counters or wait-staff. In the US, Amazon and others aren’t far behind. This portends tough times for employment at the bottom end of the retail food chain. But not everything is going without a hitch.
And staying in China, their central bank has set the value of its currency at its highest level against the USD in over 18 months.
In Europe, and in a very EU-style, they have launched a new set of rules around “greater transparency, competitiveness and efficiency in financial instruments, and less scope for fraud and malfeasance”. But to do that, these rules are complex and prescriptive and run an incredible 1.4 million paragraphs! And they are taking an American approach, making them apply outside of the EU for anyone dealing in financial instruments originating there. The complexity is immense and will be costly especially for small players. Lawyers are cheering and will get very rich on this.
The UST 10yr yield has settled back a little to 2.45% today (-2 bps). In China, the equivalent 10yr sovereign bond is yielding 3.92% (unchanged) while the equivalent NZ 10yr sovereign bond is yielding 2.77% (+2 bps).
Oil prices are up by more than +US$1 in the US today with the WTI benchmark now just over US$61.50 a barrel, while the Brent benchmark is just under US$67.5. In the natural gas market, China is ramping up its domestic production of fracked shale gas.
Gold is up another +US$3 to US$1,315/oz.
This morning the Kiwi dollar is at a similar position to this time yesterday at just on 71 USc, and on the cross rates it is at 90.6 AUc, and against the euro it’s almost a cent higher at 59.1 euro cents. That puts the TWI-5 at 73.2.
Bitcoin has only seen a minor gain in the past 24 hours and is now at US$14,888.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».