Here’s our summary of key events overnight that affect New Zealand, with news China is still growing is foreign exchange reserves.
But first in the US, their jobs recovery lost some steam in December, with the level of new jobs created coming in at +148,000 and well below market expectations and the lowest December in the past four years.
The American trade deficit rose to -US$50.5 bln in November its highest level since January 2012. This is a deficit of both goods and services. Their goods trade deficit hit almost -US$71 bln in November (about half of it is with China), a -6% deterioration from the same month a year earlier, driven by a surge in imports as upbeat American households stepped up purchases of cellphones, household items and other products. Their services surplus of +US$20 bln was unchanged.
The jobs story was better north of the border. Canada’s unemployment rate dropped to a 42 year low in December of 5.7% and job creation exceeded expectations by a wide margin for a second straight month, adding +78,600 jobs in December.
In China, their securities regulator has placed a cap on the pay of bond traders. They now say annual salary and bonus from bond trading business for securities brokerage employees should not exceed 1 million yuan (NZ$215,000) and if there is anything above that it needs to be delayed and paid in two years.
China’s foreign-exchange reserves posted an 11th straight monthly increase of +US$20.7 bln to US$3.14 tln in December, slightly better than analysts estimates. That brought the full-year increase to +US$129 bln driven by tighter capital controls, a stronger yuan and economic growth that is holding firm.
China’s leading home appliance maker Haier announced its global revenue increased 20 percent to US$37.2 billion in 2017. Profits were up +41%. They said the great result came from the company’s rapid growth in the high-end home appliance market. Haier owns both GE Appliances, which it bought in 2017, and Auckland-based F&P Appliances which it bought in 2012.
Going the other way, HNA is going down the gurgler with more missed payments.
Australia’s trade in goods and services slumped to a AU$628 mln deficit in November. Weaker commodity exports, especially for coal and grain, combined with increased imports for the worst result since October 2016. The result came in far below market expectations of a surplus of up to AU$800 mln, with even the most pessimistic forecasts of a flat balance proving to be out of reach.
The UST 10yr yield is unchanged at 2.48% today (+3 bps). In China, the equivalent 10yr sovereign bond is yielding 3.94% (unchanged) while the equivalent NZ 10yr sovereign bond is yielding 2.76% (-1 bp). We should also note that the US 2-10 yield curve is now just +50 bps and its lowest in more than a decade. Further, we should note that the difference between the North American investment grade credit default swap index and the Australasian one is now the skinniest at +1.45 bps than at any time since November 2007. On their own, the Australasian corporate CDS spreads are now at an historic low level and probably their lowest ever.
Oil prices are lower by -US$0.50 in the US today with the WTI benchmark now just under US$61.50 a barrel, while the Brent benchmark is just under US$67.50.
Gold is up another +US$3 to US$1,321/oz.
This morning the Kiwi dollar is firmer this morning at just on 71.7 USc, and on the cross rates it is at 91.2 AUc, and against the euro it’s also higher at 59.5 euro cents. That puts the TWI-5 at 73.9 and its highest since when Winston Peters anointed Jacinda Ardern.
Bitcoin has sunk back a little from its Saturday boost and is now at US$15,964, a -2.9% retreat.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».