Here’s our summary of key economic events overnight that affect New Zealand, with news we need to brace for an end to the US Fed’s independence. It may not be at risk right now, but the signs aren’t promising. And politicians everywhere will seize on the mood to pull that level, to ease their own policies that don’t deliver. The juice of monetary stimulus is just too enticing, the risks be damned.

First in the US, investors are expecting Nvidia’s earnings to be reported after the NYSE closing at 8am NZT, seen as a key test for the AI boom driving markets. The S&P 500 and Nasdaq are marginally higher in advance of that, while Nvidia shares are little-changed. But the derivatives market in the stock is set for a -6% swing and if that happens, that will be a -US$270 bln fall – probably the biggest movement of any economic metric today anywhere in the world. We will know soon enough.

Some think we should also watch the share price in Costco and Walmart. They both have lofty valuations that raise the risk of serious correction. These three are all enormous companies – Nvidia has a market cap of an eye-watering US$4.4 tln, Costco US$420 bln, and WalMart is US$770 bln. In each case that is way more than New Zealand’s GDP. WalMart plus Costco is approaching Australia’s GDP.

Staying in the US there was little data out overnight. The volume of mortgage applications softened by -0.5% last week from the previous week, extending the -1.4% trim from the prior month. Applications to refinance an existing mortgage fell by -3.5% offsetting the +2.2% increase in applications for a mortgage to buy a new home.

Separately, American officials are decrying the intelligence efforts by the Chinese Ministry of State Security and their ‘Salt Typhoon‘ operation. But they have been caught running covert operations in Greenland. The Danes are unimpressed. Trump’s America is no-one’s friend. Even at home, his militarisation of local policing, grabbing shares in companies without paying, are worrying developments. His efforts to subvert the Fed are just part of an effective quiet rolling coup with a much broader agenda. These are stand-over tactics that will undermine the US reputation for generations. If you can read this (subscriber), it is a sobering change of view by Bill Dudley, previously the head of the New York Fed.

In Taiwan, their industry may be going at full tilt, but consumer sentiment is actually weakening. An August survey there shows it at its weakest level since April 2023, as five of six key indicators deteriorated.

Chinese industrial profits fell again in July, down -1.7% from a year ago in July. They fell -7.5% for SOE’s but were up +1.8% for private businesses.

Yesterday, there was a big surprise in data released in Australia on inflation. Their monthly indicator had fallen consistently to 1.9% in June. The RBA was relieved. But the July level came in at 2.8%, an unexpectedly large jump. There will be head-scratching. Higher electricity prices (+13.1%) are getting the blame.

The UST 10yr yield is now at 4.24%, down -1 bp from yesterday at this time. Long bond yields, especially the 30 year, are rising more quickly now. The key 2-10 yield curve is now steeper at +61 bps. Their 1-5 curve is still inverted and still by -13 bps. And their 3 mth-10yr curve is inverted -8 bps. The Australian 10 year bond yield starts today at 4.32% and unchanged from yesterday. The China 10 year bond rate is up +1 bp at 1.77%. The NZ Government 10 year bond rate starts today at just over 4.40% and little-changed from yesterday.

Wall Street is again little-changed, with the S&P500 up less than +0.2% in Wednesday trade before the Nvidia result. Overnight, European markets mixed between Frankfurt’s -0.4% and Paris’s +0.4%. Yesterday Tokyo ended up +0.3%. Hong King was down -1.3% and Shanghai fell a greater -1.8%. Singapore ended little-changed. The ASX200 rose +0.3%. But NZX50 fell -0.7% in its Wednesday trade with another sharpish fall away at the end of trading.

The price of gold will start today at US$3,395/oz, up +US$14 from yesterday.

American oil prices have risen +50 USc to US$64/bbl with the international Brent price now just under US$68/bbl.

The Kiwi dollar is at just on 58.6 USc and little-changed from yesterday at this time. Against the Aussie we are down -30 bps at 90.3 AUc. Against the euro we are up +10 bps at 50.4 euro cents. That all means our TWI-5 starts today at just under 66.3, and little-changed from yesterday.

The bitcoin price starts today at US$112,400 and up +2.4% from this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 1.2%.

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