In the US, Fed Chairman Powell is giving testimony to Congress today and tomorrow, and today acknowledged that a soft landing for the giant American economy will be "challenging" and he also acknowledged that a recession is a real possibility there.
That dose of realism has put a huge damper on financial markets today, but Wall Street is actually up, presumably on the basis that his comments on the outlook weren't worse.
American mortgage applications rose again last week, a second successive weekly gain after a long period of declines. They also reported that the average 30 year mortgage rate is almost touching 6% there. It was just 3% at the beginning of 2022.
In more positive news the US retail Redbook index shook off its prior week slowdown to return to its 'normal' strong recent year-on-year gain, well above what can be accounted for in inflation.
There was a US Treasury bond auctions earlier today. The 20yr one was very well supported and came in with a median yield of 3.41% compared to 3.22% at the prior event a month ago.
In China, their southern manufacturing hub in Guangdong raised its flood warning to the highest level due to the worst rains in decades in the Pearl River basin, spurring more evacuations and threatening further supply chain disruptions in an economy reeling from Covid-related lockdowns.
And pressure, already extreme, is still rising on the Chinese property development sector.
Sales have been very weak, with most of their large listed companies reporting they are only achieving less than 30% of their sales targets, and that is even after more than 200 cities have rolled out policy measures to support the struggling housing market. Nothing authorities are doing there is helping yet.
That is having a direct impact on commodity prices, like copper and iron ore.
The UST 10yr yield starts today down -8 bps at 3.15%. The UST 2-10 rate curve is marginally steeper at +9 bps and their 1-5 curve is flatter at +41 bps. Their 30 day-10yr curve is however steeper at +215 bps.
The Australian ten year bond is down a very sharp -31 bps at 3.81%, an eye-opening move reflected across all durations. The China Govt ten year bond is -1 bp lower at 2.80%. And the New Zealand Govt ten year will start today -6 bps lower at 4.17%.
On Wall Street, the S&P500 is up +0.9% in its Wednesday session so far. Overnight in Europe, yesterday's positive mood evaporated with markets down about -0.8%.
Tokyo closed yesterday down -0.4%, Hong Kong was down a very sharp -2.6%, and Shanghai closed down -1.2%. The ASX200 ended its Wednesday session down -0.2% which was matched by the NZX50.
The price of gold is now at US$1841/oz in New York and up +US$5.
And oil prices are -US$1.50/bbl lower from this time yesterday at just under US$107/bbl in the US, while the international Brent price is now just over US$110/bbl.
The Kiwi dollar will open today at just under 63 USc and -20 bps softer than this time yesterday. Against the Australian dollar we soft 90.7 AUc.
Against the euro we are much lower at 59.5 euro cents. That all means our TWI-5 starts today at just under 70.8, and down -50 bps from this time yesterday.
The bitcoin price has moved up from this time yesterday and is now at US$20,235 and up +1.9%. Volatility over the past 24 hours has been high again at +/- 3.6%.
Source: Interest .co .nz
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