Global Themes


Risk off Continues

Equities and Oil fall, Treasuries and the Greenback advance.

Oil has plunged to new lows overnight, down USD3/bbl to USD54/bbl. These are the lowest levels in 15 months. Closely tied to Equities, lack of oil demand is the driver of the sell off. Investors continue to point to escalation trade tensions, and signs of a looming slowdown in retail growth. The UST 10y yield down to 3.05%.

On the data front, US Housing starts have come in weak. For October they are -2.9% below the same month a year ago and even below some weak analyst expectations. Building permits fared even worse, coming in -6.0% lower than the same month a year ago.

Dairy Bear Market Woes

Global Dairy Prices Down 20% since May.

This mornings dairy auction has brought a continuation of sinking prices. Prices are now back at levels last seen back in August 2016. Since the previous auction a fortnight ago we have witnessed a -5.7% fall in NZD terms. This downward trend is going to weigh heavily on farm gate milk pricing guidance.

The Kiwi dollar is starting today slightly below the 0.6800 level against the USD. On the cross rates; the NZD/AUD has pushed slightly above 0.94, NZD/EUR rolled lower to 0.5990, and the NZD/GBP currently sitting at 0.5315.

IMF changes view on Australia

An AUD importer opportunity.

The IMF has warned the balance of risk to the Australian economy has "tilted to the downside" due to a deteriorating global outlook, urging the RBA to keep interest rates low. The NZD/AUD moving higher on the day. The RBA has kept their rate unchanged but has noted the IMF position.

Later in the week, we get US durable goods numbers on Thursday and Canadian inflation to end the week, but for now trade tensions and risk off sentiment look set to dominate for the time being.

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