US home sales flat-line; China makes trade war move; Basel Committee targets window dressing; UST 10yr at 3.07%; oil down and gold up; NZ$1 = 6.8 USc; TWI-5 = 70.3

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By David Chaston & Gareth Vaughan

Here’s our summary of key events overnight, but first we need to advise there will be no video accompanying this article today.

In the US, home sales flat lined in August but inventory increased for the first time in three years as the housing market continued to struggle despite strength across the broader economy. Median prices were up +4.6% however, despite the low sales volumes.

Those rising prices are helping boost household net worth. June data shows it rose by +US$2.2 tln to a fresh high of US$97.2 tln in the second quarter, boosted by a stock-market rally and those higher property values.

A private update of jobs growth in Canada shows only a modest gain, one far below the gain recorded in the same month a year ago.

Overnight, both the Swiss and the Brazilians reviewed their official interest rates and both left them unchanged.

In the trade war, Bloomberg is reporting China is planning to cut average tariff rates on imports from the majority of its trading partners as soon as next month, in a move that would lower costs for consumers as the trade war with the US deepens.

This comes as Chinese firms start to cut jobs and move overseas as US trade war and rising costs start to bite. Many other South East Asian nations could be significant winners in this skirmish.

The American escalation of the trade war will squeeze export volumes, crunch confidence, stall investment plans and threaten employment and living standards around the world, according to a cautionary OECD assessment.

In Basel, Switzerland the Basel Committee on Banking Supervision has held a two day meeting.Among the topics discussed was the results of its annual assessment exercise for global systemically important banks (G-SIBs), or too big to fail banks. The 2018 list of G-SIBs will be published at a later date. The Committee is also set to publish a newsletter on leverage ratio window-dressing behaviour, through which banks adjust their balance sheets around regulatory reporting dates to influence reported leverage ratios.

In the US the Dow Jones Industrial Average was the last of Wall Street’s main equity indexes to regain record heights as technology companies led a broad-based rally despite the trade war rumbling away in the background, Reuters reports. Elsewhere Turkey sharply cut its growth forecasts for this year and next year.

Meanwhile, the staggering story of Denmark’s Danske Bank continues. The bank faces a fresh money laundering inquiry with political anger growing over a scandal involving some €200 billion euros in suspicious payments through Estonia. Danske’s CEO Thomas Borgen resigned after an investigation commissioned by Danske Bank exposed control and compliance failings. Now Denmark’s Financial Services Authority is reopening its investigation of the bank. 

The European Commission has described the money-laundering case at Denmark’s largest bank as “the biggest scandal” in Europe. Bill Browder, a US hedge fund manager leading a crusade against corruption and money laundering by Russians, claims Danske’s Estonian branch was involved in the fraud uncovered by his lawyer Sergei Magnitsky, who was beaten to death in a Russian jail in 2009.

The UST 10yr is now just on 3.07%. Their 2-10 curve is softer at +29 bps. The Aussie Govt 10yr is at 2.72% (up +1 bp), the China Govt 10yr is at 3.69% and unchanged, while the NZ Govt 10 yr is at 2.69%, up +2 bps.

Gold is up +US$3 today at US$1,206/oz in New York.

US oil prices are lower today and now over US$70/bbl. The Brent benchmark is now over US$79/bbl. 

The Kiwi dollar is starting today up another +½c at 66.8 USc on yesterday’s strong GDP result. On the cross rates we are also firmer at 91.8 AUc, and 56.8 euro cents. That puts the TWI-5 at 70.3.

Bitcoin is also firmer at US$6,412, a gain of +1.8% since this time yesterday. This price is tracked in the currency charts below.

This chart is animated here. For previous users, the animation process has been updated and works better now.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».

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End of day UTC
Source: CoinDesk

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