US jobs grow as expected; China exports tumble, producer prices sink further; Russia destroys food; UST 10yr yield 2.17%; AU banks shares shed value; NZ$1 = 66.2 US¢, TWI-5 = 71

Here’s my summary of the key events over the weekend that affect New Zealand, with news of value declines everywhere you look.

But first, American jobs growth rose at a solid clip in July and wages rose +2.1% pa, after a surprise stall in June, both signs of an improving economy. That opens the door wider to a Federal Reserve interest rate increase next month. Their unemployment rate is 5.8% (NZ is 5.7%) and their participation rate is 62.6% (NZ is 69.4%). But despite meeting their expectations, markets seemed unimpressed.

Even less impressive but for better reasons, Chinese exports tumbled -8.3% in July, their biggest drop in four months and far worse than expected, reinforcing expectations there that Beijing will be forced to roll out more stimulus. China’s official reserves actually fell in July.

But the latest inflation data from China shows prices rising +1.6%, their fastest rise in about nine months. Going the other way however, producer prices fell more than expected.

Russia is enforcing the ban on European food imports by destroying hundreds of tonnes of foodstuffs, including cheese that has been smuggled into the country, especially in the Pacific east. Not everyone is happy, though, with more than 200,000 people signing a petition that this food should have been distributed to those who are suffering from the ban.

In New York, the UST 10yr yield benchmark slipped again on Friday and is now at 2.17%.

The US oil price fell on high petrol stocks in the US, now currently below US$44/barrel, and Brent crude is now below US$49/barrel. In fact, Brent crude is at a five month low. Commodity prices generally continue there fall with the CRB index now at a 13 year low.

And the gold price is staying down, now at US$1,093/oz. Two big recent buyers, the central banks of Russia and China, have seen the value of their holdings drop by some large amounts recently.

But if you really want to see a big local value drop, the market capitalisation of the big four Aussie banks fell by more than NZ$30 bln last week as it became clear that regulator requirements for more capital is reducing the attractiveness of the high-leverage play that bank stocks have become.

The New Zealand dollar starts the week with a somewhat surprising uptick at 66.2 US¢, at 89.3 AU¢, and at 60.4 euro cents. The TWI-5 is now at 71. This is the highest the Kiwi has been in a week and a half. But it is not really due to local factors, more a reflection of weakness in the other currencies.

If you want to catch up with all the local changes on Friday, 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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