US house sales hesitate but prices higher; US factories slow, EU factories expand; VW cheating widens; a China corporate debt squeeze; UST 10yr yield 2.26%; gold lower, oil up; NZ$1 = 65.1 US¢, TWI-5 = 70.9

Here’s my summary of the key events overnight that affect New Zealand, with news of slowing growth in the US and expanding growth in Europe

US home resales volumes dialed back more than expected in October, with larger falls in regions which have experienced the biggest price gains. The pace of their housing market recovery may be slowing after strong gains earlier this year. But prices are still rising; the median price is now US$219,600 (NZ$325,000), +6% above the same month a year ago.

Following a modest rebound in October, the latest ‘flash’ US factory PMI has come in lower; in fact its lowest level in 2 years. Their factory sector is still expanding, just not at the heady pace of a year ago. The fast-rising US dollar is having a noticeable restraint on export orders.

In contrast, the latest Eurozone factory PMI is expanding faster, now at a 19 month high. If you add in services, their overall economic expansion is now at a four year high. Gains were led by Germany, they lag in France.

And staying in Europe, a lab test carried out for a British TV program shows that Volkswagen diesel cars used their “defeat device” to cheat official European pollution tests, as well as those in the US. This dramatically widens VW’s problems. If you see a German car flashing the TDI badge, you know it is a dirty diesel. And there are plenty in New Zealand.

We should also note that there has been a change of government in Argentina, and there is likely to be a change in economic direction. The polarising Kirchners are out, a centre-right government is in.

And in China, there is a growing squeeze on corporate debt, even investment grade debt. Yields are rising following the surprise failure of a cement maker, and bond placements are drying up as markets reassess risks.

In New York, the UST 10yr yield benchmark is unchanged however, at 2.26%.

The US benchmark oil price is slightly higher, now just over US$42/barrel, while the Brent benchmark is just over US$45/barrel.

But the gold price is lower, now at US$1,069/oz.

The New Zealand dollar starts today at 65.1 US¢ after the greenback rose strongly as the Fed’s rate hike gets closer. Against the Aussie we are at 90.5 AU¢, and against the Euro at 61.3 euro cents. The TWI-5 is at 70.9.

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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