US house sales and prices rise; Sydney house prices hit stratosphere; UST 10yr yield 2.31%, oil and gold tumble; NZ$1 = 65.8 US¢, TWI-5 = 70.7

Here’s my summary of the key issues overnight that affect New Zealand, with news of sharply falling commodity prices.

But first and going the other way, sales of American homes rose in June to their highest level in more than eight years. Median prices there have also jumped, hitting US$236,400 (NZ$360,900). Their housing recovery is in full swing. It is another sign of growing household confidence, even pent-up demand, and that won’t discourage the US Fed from raising their benchmark interest rates later this year.

Even more dramatically on the house price front, in Sydney the median house price there has topped AU$1 mln for the first time ever. That’s an eye-popping +23% rise in one year.

Real estate may be going up in price, but most commodities aren’t. The World Bank today said it expected non-energy commodities to drop -12% in 2015 while energy-related commodity prices will drop almost -40%. Movements of these magnitudes are powerful and reshape economic trends. In this cycle, consumers are the beneficiaries, producers the losers. But cycles being what they are, the tables will turn. We will probably see savvy investors buying in the dip.

In New York, the UST 10yr yield benchmark is lower today, now at 2.31%.

Oil markets are also lower. The US benchmark price is now just on US$49/barrel, and Brent crude is down to US$56/barrel. Higher than expected crude and petrol stocks are weighing on prices, right in the middle of their ‘driving season’.

And in China, the regulated price of petrol has been cut in an official move overnight.

The gold price is down too, now at only US$1,089/oz. That is now back to its 35 year average and a big come-down. By my count that is a -7% fall in US dollars since the beginning of the year, but a +7% gain in New Zealand dollars over the same timeframe. However if you had held US dollars over the same period you would have had a +16% gain. That makes gold seem a poor hedge.

The Kiwi dollar has also slipped with the general fall in commodity prices. We are start today at 65.8 US¢, at 89.3 AU¢, and at 60.4 euro cents. The TWI-5 is at 70.7.

Tune in at 9am today for the latest on the Reserve Bank’s latest OCR decision. Markets will be surprised if the rate is not cut -0.25% to 3.00%.

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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