Here's our summary of key economic events overnight that affect New Zealand with news that Chinese consumers are wary of what lies ahead in a possible Delta winter and household preparations are distorting their retail economy.
But first, at their latest review, the US Federal Reserve has announced the start of its tapering program this month. It said that it is reducing the monthly pace of its net asset purchases by -US$10 bln for Treasury securities and -$5 bln for agency mortgage-backed securities. These are modest reductions in their bond buying, but the plan is to end it by June 2022, a key step toward withdrawing pandemic-driven economic support amid a recent inflation surge. Overall, this is generally as expected.
The October US non-farm payrolls report is due on Saturday (NZT) and a gain of +450,000 is expected following the very weak September result. Today the precursor ADP Employment report surprised on the upside, showing a rise of +571,000 on top of their September +523,000. In October, every sector they monitor reported good gains.
If the jobs report comes in as expected, that will be a good result given that their September factory order data was a very modest improvement over August. But at least it was +14% higher than for September 2020 and +7% over September 2019 pre-pandemic levels.
The more current services sector activity indexes for October were very strong however. The widely-watched ISM one positively glowed at an all-time high and noting that "demand shows no sign of slowing". The internationally-benchmarked Markit one was positive too noting "a steep upturn", just not a record high for them.
The rise of air cargo activity in the US tells the same strong story. But activity in this sector is not impressive in the Asia/Pacific region. And there is little recovery in international passenger air travel, and again the Asia Pacific region remains the hardest hit. But with a children's vaccine now being rolled out in the US, vacation bookings are up steeply in the US.
None of this will be helped by a growing pandemic spread in China, now its largest since Wuhan. Nineteen of 31 Chinese provinces have restrictions of some sort, many of them severe.
And people there are worried, especially as winter is approaching. Household "stocking up" is a growing distortion in China's retail trade, so much so the authorities issued a warning to local authorities to take action to prevent hording staples. Along with this alarm, some major food suppliers are hiking prices sharply. Their stress has all the potential to distort global food supplies and prices.
In Australia, residential building permits fell by a more than expected -4.3% in September from August, driven by a fall in house approvals in all states, and a fall in unit approvals in all states other than NSW where they had a surprising bounce.
And staying in Australia Delta cases in Victoria have dropped to 941 cases reported there yesterday, and less than the day before and the second time in more than a month it has been below 1000. There are now 18,361 active cases in the state and there were another 8 deaths yesterday. In NSW there were another 190 new community cases reported yesterday with 3,180 active locally acquired cases which is lower, and they had another 4 deaths yesterday. Queensland is still reporting zero new cases. The ACT has 15 new cases. Overall in Australia, more than 78% of eligible Aussies are fully vaccinated, plus 10% have now had one shot so far.
The UST 10yr yield opens today at 1.59% and up +5 bps overnight with most of the rise coming after the Fed tapering decision. The US 2-10 rate curve starts today unchanged at +109 bps. And their 1-5 curve is also little-changed at +102 bps, while their 3m-10 year curve is now at +152 bps. The Australian Govt ten year benchmark rate is unchanged at 1.84%. The China Govt ten year bond is up +2 bps at 2.96%. The New Zealand Govt ten year is down -2 bps at 2.54%.
On Wall Street, the S&P500 has opened today down a minor -0.1% in the Wednesday afternoon trade and remaining close to its all-time record high. After the Fed decision it moved to +0.1% higher, so only a minor reaction. Overnight, European markets were higher but mixed with Paris up another +0.4% and a new 20 year high, but London down -0.4%. Yesterday, Tokyo was on holiday. Hong Kong fell another -0.3% and Shanghai ended its session down another -0.2%. The ASX200 ended its Tuesday session up +0.9% while the NZX50 finished flat.
The price of gold will start today at US$1766/oz and down a rather sharp -US$22 from this time yesterday. Silver fell similarly. US tapering brought little reaction.
And oil prices are a very sharp -US$2.50 lower at just on US$80.50/bbl in the US, while the international Brent price is now at US$82/bbl.
The Kiwi dollar opens today recovering about +30 bps to just under 71.4 US. The Fed tapering decision hasn't really moved currency markets yet. Against the Australian dollar we are +60 bps firmer at 96.2 AUc. Against the euro we are also up at 61.6 euro cents. That means our TWI-5 starts today +40 bps higher than at this yesterday at just under 75.1, and still well over the top of the 72-74 range of the past eleven months.
The bitcoin price has fallen -2.7% since this time yesterday, and now at US$62,076. Volatility over the past 24 hours has been modest at just over +/-1.7%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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59 Comments
Interestingly Foxy, COVID may be Taiwan's greatest friend in China. All they really need to do is make sure it gets into the Politburo, the centre of the CCP. They are pretty much all elderly there so vulnerability will be high. The irony would be rich wouldn't it?
The inadequacy of the vaccines how do we measure that?
Do we measure it by the ability of The vaccines to prevent infection?
Do we measure it by the ability of The vaccines to prevent spread?
Do we measure it by the ability of The vaccines to prevent serious illness?
Do we measure it by the ability of The vaccines to prevent death?
And are the results even enough to apply across the whole population indiscriminately?
It is much agreed that the two weapons of choice against the pandemic are lockdowns and vaccines and eventually the latter should overcome the need for the former. So just to keep the question & answer simple, if despite the widespread vaccination levels in China the nation is now re-introducing severe lockdown criteria, not my words but others, welding people in their homes, then it can surely be argued that the vaccines being used are not producing that result and are therefore inadequate.
Looking around the world we see exactly the same graphs over and over again, cases rise up to a peak and then fall away, the presence of vaccinated people or not does not seem to influence this pattern, and some countries such as South Africa showed an extremely clear pattern of these peaks coming around on a roughly six monthly basis.
It's really hard to see any conclusive evidence for vaccine effectiveness at a societal level. Case numbers are similar when you compare them with previous waves and less vaxed countries. There are lower deaths but how much of that was due to the waves being late summer.
If we look at Singapore and Vietnam they did not loose control of case counts till after vaccination, sure there were policy changes but you would have though it might offset them.
You aren't thinking about this right. Vaccination for COVID isn't about reducing case numbers, it's about having better outcomes for those that contract the virus. If you look at that, you will see a clear difference between vaccinated and unvaccinated populations - deaths and hospitalisations dramatically decrease when you are vaccinated. COVID will become endemic everywhere, unless it dies out.
You aren't thinking about this right...
It's not actually a health crisis at all...
It's an energy crisis we are facing ... per capita... we need to triage the economy Down... or inflation explodes
Hmmm, I wonder how they can address this?
Not lockdowns, restricted freedoms, restricted consumption, restricted people by chance?
Vaccination policy is based on lowering societal transmission, without this there is no solid justification for needing to vax the healthy under 60 (we don't enforce the Flu vax for the elderly).
Unvaxed death rates in the UK are still lower than last winters wave (your welcome to check this but i think my methodology is fine) so I don't think vaccines get all the credit for lower societal deaths. How much is vit d levels?
No, it's not about lowering societal transmission. Vaccination is and always will be about protecting people as much as possible against a harmful disease - it's always, always about health outcomes. You seriously need to look up what a vaccine is and why we have them as it sounds like you don't understand. A sterilising vaccine will prevent transmission in a population, non sterilising vaccines lower but do not stop it. Many vaccines we have are non sterlising. This is a subtle but important difference.
Unvaxed death rates will definitely be lower, that's because viruses tend towards mutation where they are less deadly to the host and hang around for longer. That's simple evolution at work. We also learn better treatments the more cases we get. When doctors find particular drugs work for infected people, they spread the message widely. Same for how to handle the infected, we simply get better and better equipped to know how to handle patients.
Do we want to circle back to looking for for actual empirical data showing societal benefit for covid vaccination, like every other one we use has? and then we can get into using that data to support arguing for public health policy if you like. (I'm sure it does improve out comes but can we find it? or is comparable to other vaccines?) For example, is this showing significant societal benefit.
Even the non sterilising vaccines in use appear to eliminate the disease, I assume though reduced transmission from a reduced infectious period.
Do you want to stop shifting the goalposts?
Your link is pointless without context. There are two things you should do, it's not even that hard.
Google "Israel COVID". Compare New Cases vs Deaths and their spikes. Note that before they attained >50% vaccination the spikes were close to identical (i.e. the disease was killing around the same percentage of people). Then with >50% vaccinated, deaths dropped off dramatically, despite having even higher numbers of new cases. And that's with around a 50-60% fully vaccinated rate.
Do the same with the UK. Similar results. Do the same for Australia. Similar results (the recent spike in Aus dwarfs anything previous, but deaths are a small percentage by comparison). This shows you the efficacy of the vaccine across the population which is pretty much all we care about. Less deaths/maiming of people = better societal benefits. With NZs vaccination rate, we should probably already be open completely, as long as we are planning for boosters.
You really can't compare waves cleanly. You just asserted deaths/cases gets smaller every wave regardless of the vaccine a few post back with some theoretical reasoning after I posted the UK data shows it happening for the non vaxed as well. You can assume some but not all of this is from the vax (as I said a few post ago) but can it be be clearly shown just from societal level data.
The goal is to find clean data to argue for actual vax benefit at a social level. This could be vax matched societies next to each other where the are almost the same but one got vaxed. Israel got the vax much earlier and palistine did not and should have poorer healthcare, should we see something here? (you appear to reasonably disagree that this is valid comparison) If there's no good data to compare outcomes then just leave it.
You started this with your own goal posts, off on a tangent. I just made a comment on societal data not disagreeing with the previous post. This is really not interesting to anyone.
What about adding
Assuming the vaccine is effective?? How long does that last for? In order to get a vaccine passport the Israel government has said you must have had a booster within the last 6 months
Assuming it does slow the spread?? What will be the effect on the human body of needing 6 monthly boosters
Whats wrong with natural immunity?
Natural immunity is just catching Covid. A few countries tried that early on - just letting it run rampant to build up natural immunity. It didn't go well.
The point in the vaccine is that it makes catching Covid less dangerous - natural immunity obviously doesn't achieve that, as you have to catch Covid first.
Not sure about 6 monthly, but I've been taking flu jabs every year for a few years as a healthcare worker - no issues here other than a slightly sore arm.
Sweden has recorded more than 15,000 deaths from coronavirus, many times the per capita level of its Nordic neighbours that implemented tougher restrictions, but still lower than in most European countries that locked down tightly, such as Britain. Its pandemic strategy has been controversial at home and abroad. Critics have called it reckless and cruel but the approach has also earned praise for being more sustainable and business-friendly and as a model for living with the virus as it becomes endemic.
What is that based upon sparrow? Long lasting T cell immunity may explain why the majority of people show no symptoms when they catch covid.
"...A key finding of our study is that pre-existing T-cell immunity to SARS-CoV-2 is contributed by TCRs that recognize common viral antigens such as Influenza and CMV, even though the viral epitopes lack sequence identity to the SARS-CoV-2 epitopes. This finding is in contrast to multiple published studies in which pre-existing T-cell immunity is suggested to arise from shared epitopes between SARS-CoV-2 and other common cold-causing coronaviruses. However, our findings suggest that SARS-CoV-2 reactive T-cells are likely to be present in many individuals because of prior exposure to flu and CMV viruses."
That sort of indicates as good as it gets doesn’t it. Infections throughout the population but the danger of them minimised. It is hard to imagine that it could be claimed that vaccination’s role in that outcome is not significant. Therefore, without wishing to belabour the point, if in China civilians are still needing to be locked down for their own protection, then obviously the vaccination there is failing to provide that function.
The incumbent Chinese vaccines have low efficacy, no matter how the state propaganda spins.
Singapore has made it clear that the Sinovac vaccine is less effective. People can now get the Sinovac vaccine instead of Pfizer or Moderna in Singapore, but the administration requires three shots during 90 days. Also, Sinovac is not for booster use. "Get the mRNA shots if you can" is the official line. China never shares this news with their citizens.
Comrade Xi puts his hope in the in-house developed mRNA shots while refusing to approve the 100 million Pfizer/BioNTech they have purchased. It is a true-crime against the Chinese people.
Food is a really touchy subject in China, remember though that the last famine in China was '59 to '61 which is within living memory. If we'd ever had a famine in the West we'd be stocking up as well.
Anyway I'm off on holiday abroad for a few months. Enjoy a BBQ on Crate Day (4th of December this year) and invite all of your mates around, this should be a summer of happiness and enjoyment with friends and family because it's been a tough year for many. Prioritise the people that really matter in your life. ¡Adiós!
haha, nice one Squishy. Crate day ftw!
But don't forget the most important part of the day - once you've swilled your dozen, you must break your crate with your head.
(not sure why wiki says it was started by some uni students in 2005, it was around a long time before that)
Is that you Paul?
"FAO’s latest information points to a record cereal production of 2 800 million tonnes (including rice in milled terms) in 2021, up 1.1 percent from the outturn in 2020. "
So, anyone know what the real unemployment rate is:
https://www.nzherald.co.nz/nz/politics/as-many-as-45000-missing-from-un…
More to come with unvaccinated workers being exited.
Did anyone see the J Shaw interview last night (I think on 3). He looked like a right muppet and completely taken aback when he realised the main part of the COP26 was this week and that he/the greens weren't going until next week.
If this is actually the best we can hope for in NZ re environmental change, then looks like we are indeed doomed.
Biden's mental decline will be publicly accelerated and he will be exited stage left to stop the rot..
"Crushing defeat in Virginia governor’s race stokes fears among Democrats
Republican Youngkin’s victory ...paints a distressing picture for the president’s party ahead of next year’s midterms, when control of Congress will be up for grabs. Analysts said if the swing against the Democrats is replicated next year, they stand to lose their grip on the House and the Senate, which they hold by slim margins."
https://www.ft.com/content/a44828e6-c522-449e-8f49-91a8c9fff3eb
It was always an election between Pence and Harris. The only ones that didn't seem to realise that were the voters.
Interesting times ahead. Two more years, Dems will be doing everything to prop him up, as I think they are more scared of an African American Female President than the Republicans are.
The Democrats arrived at the final draw and realised Biden was the only viable candidate they had. Well at least he did beat and displaceTrump. If Biden’s stamina, composure and credibility is now as strained as it looks to be already then that progression will rapidly worsen. Harris is not of presidential calibre which is what happens if you select purely for electorate attraction. The donkeys are in a blind canyon and the elephants are charging, is Trump trumpeting at the front of the herd.
This is what happens when you embark on any policy of "Whatever it takes!"
'Crossing your fingers', and hoping that somehow it all works out after implementation, is not sound policy. But in the heat of battle, there is often no other choice.
Real skill comes from addressing the wreckage of battle from Day One of 'success' - and that, is what the Central banks of the World - and the Democrats, of course! - have failed to do. Pyrrhic Victory, and all of that....
It's scary, Tony alexander and I see eye to eye on so much these days.
Like me, he sees one final housing upswing this summer, before a slump.
https://www.oneroof.co.nz/news/40439
Not familiar with this guys past calls but that article is on point IMO. Many I know will be rage travelling overseas in a year or two, probably be easier to get to Pacific Islands or South East Asia than Queenstown at this rate! Not that anyone wants to go to Queenstown anymore.
The widely-watched ISM one positively glowed at an all-time high and noting that "demand shows no sign of slowing".
ISM Services Soars To Record High (Thanks To Supply-Chain Chaos)
“While the service sector is seeing a waning impact from the pandemic, it’s a different story in manufacturing, where the supply crisis continues to cause havoc and dampen production growth. Supply delays worsened in October, which has in turn fed through to a further intensification of inflationary pressures.
“Going forward, the big questions will revolve around the extent to which manufacturers can overcome their supply chain bottlenecks, which look set to worsen as we head towards the busy holiday period, and whether the service sector can sustain its current resilience as the rebound from the pandemic starts to fade and incomes are squeezed by higher prices.”
Was this Q3 soft patch really only due to delta COVID?
If it was, then as the economy shakes off its impacts (see: today’s ISM Non-manufacturing record high) it is still faced with the unemployment cliff in 2021 which, unlike the one in 2020, is final. There’s no restored funding coming, no Helicopter #4 on the horizon.
And if Q3’s slowdown isn’t only attributable to the pandemic, as the bond market clearly sees it, the huge loss of pandemic claims only subtracts that much more from the fading “stimulus” regime already having given up most of its effects months ago.
You might see why no one wants to talk about the unemployment cliff, certainly not at the same time they’re all-in on red hot inflation. Link
From that hotbed of anti vaxxers the BMJ - "...But, for researchers who were testing Pfizer’s vaccine at several sites in Texas during that autumn, speed may have come at the cost of data integrity and patient safety. A regional director who was employed at the research organisation Ventavia Research Group has told The BMJ that the company falsified data, unblinded patients, employed inadequately trained vaccinators, and was slow to follow up on adverse events reported in Pfizer’s pivotal phase III trial. Staff who conducted quality control checks were overwhelmed by the volume of problems they were finding. After repeatedly notifying Ventavia of these problems, the regional director, Brook Jackson, emailed a complaint to the US Food and Drug Administration (FDA). Ventavia fired her later the same day."
Sounds like a local issue with Ventavia. Looks like they were not following all the right protocols on 1000 people (out of a total of 44000 in the wider trail). Most of it sounds like badly organised systems with people taking shortcuts.
But it's pretty clear from the real life numbers that the Pfizer vaccine works, so much of that can be written off as a bunch of screwups that a bunch of people did. The screw-ups aren't even that bad, sounds like one person was falsifying data (that got caught, there might have been more), but it doesn't say which way or what data they were falsifying. They could have just been lazy as is often the case in these matters and written the same statement for a bunch of patients that didn't apply because talking to patients was too hard. But of course it will be spun into mass conspiracy by the anti vaxxers.
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