Canada DTIs sky-high; ECB ends EQ; Far East equities rise; US deficit rises further; PBoC boss signals more stimulus; ATO releases tax details; UST 10yr at 2.91%; oil and gold little changed; NZ$1 = 68.6 USc; TWI-5 = 73.3

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Here’s our summary of key events overnight that affect New Zealand, with news of more Chinese stimulus on the way.

But first in Canada, an official housing agency is warning over the risks of very high household debt-to-income ratios. It exceeds 200% in both Vancouver (240%) and Toronto (210%) and is over 170% nationally, they say. (New Zealand’s national debt-to-income ratio is 124% and only marginally higher than what it was ten years ago.)

Overnight the ECB said it will formally end its €2.6 tln QE bond buying program on December 31. However it also said will keep reinvesting the existing stimulus reservoir for years, bolstering an EU economy which is facing both an unexpected slowdown and new political turmoil.

Yesterday, the Shanghai stock exchange closed up strongly, up +1.2%. Tokyo was up +1% and Hong Kong rose +1.3%. But these gains didn’t flow through to European markets, nor have they been reflected on Wall Street where levels are lower in mid-day trade.

And in the US, their monthly Federal Budget Statement is about to be released showing that the deficit rose from -US$100 bln in October to almost -US$200 bln in November and +40% higher than the same month a year ago. Markets don’t seen to think this matters, and it won’t until suddenly it does matter. It is heading for an annual -US$1 tln deficit. Hard to say when that will be though. (Perhaps when it reaches -5% of GDP?)

The head of the Chinese central bank was out talking up more ‘economic support’ to weigh against the economic headwinds they are facing. This is a public piece of a government-wide program to counter downward pressures.

And staying in China, authorities there are detaining Canadians in reprisals for the arrest of the Huawei CFO in Canada on sanctions-busting charges. They are paying the price for offending the PLA’s investment in its Huawei enterprise.

Yesterday, the Australian Tax Office released its 2017 tax transparency report showing that one in four of Australia’s largest companies paid no tax last year. But the news isn’t all bad; corporate tax revenues are up +AU$7.4 bln this year and the prior tax losses that allowed companies to shelter current profits are being used up fast – so fast that next year the corporate tax take is expected to rise very sharply. And all this is happening without any changes to their tax laws.

The UST 10yr yield is unchanged at 2.91%. But their 2-10 curve has risen risen to just over +15 bps. The Aussie Govt 10yr is at 2.47% (and up +1 bp since this time yesterday), the China Govt 10yr is at 3.34% and up +4 bps, while the NZ Govt 10 yr is at 2.54%, and up +3 bps.

Gold is a little lower at US$1,243/oz.

US oil prices are little changed again today at just under US$52/bbl. The Brent benchmark is now just under US$61/bbl.

The Kiwi dollar is unchanged at 68.6 USc. On the cross rates we are also stable at 94.9 AUc, and at 60.4 euro cents. That puts the TWI-5 down to 73.3.

Bitcoin is softer today at US$3,370 which is a -1.7% dip in the last 24 hours. This rate is charted in the exchange rate set below.

This chart is animated 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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NZD

End of day UTC
Source: CoinDesk

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