Here’s my summary of the key events overnight that affect New Zealand, with news some policy makers are revealing their impotence.
But first, the number of Americans filing for jobless benefits fell more than expected last week, suggesting their labour market remains on solid footing despite slowing economic growth and a stock market rout.
Wall Street is down again today by another -2%, and that makes it more than a -10% fall since the beginning of the year.
The gloom today was triggered by the Swedish central bank cutting its policy rate even further into negative territory. It seems a hopeless policy move in the face of lower-than-target inflation because previous similar changes have had no impact in getting inflation higher. Sweden was the first to institute negative rates more than a year ago and there is no sign low or even negative rates make any difference. But it is a sign policy makers have no answers down this path.
There seems a odd disconnect between actual current economic data which is pretty reasonable, and market and policy-maker sentiment which is very bearish. Group-think is taking hold.
In London, HSBC has dropped plans to freeze pay this year, according to a memo by CEO Gulliver seen by Reuters, which reverses a cost-cutting decision made less than two weeks ago. But it is keeping its hiring ban in place.
In New York, the benchmark UST 10yr yield tumbled as well today and is currently at just 1.63%. They have traded as low as 1.53%. That is its lowest since December 2012 and will do doubt bring further wholesale swap rate falls in New Zealand today.
The US oil price fell sharply too and is now under US$27/barrel while Brent is just on US$30. Now we are now near a 13 year low.
The gold price has leaped by +$60/oz to US$1,254/oz. Yesterday the World Gold Council issued a very sombre report on gold’s performance in 2015, but today’s price action has sparked the yellow metal into life.
The NZ dollar however has not caught the ‘change’ bug, again moving very little overnight. It is still at 66.9 US¢, at 94.1 AU¢, and at 58.9 euro cents. The TWI-5 is unchanged 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 ».