China CPI little-changed, PPI deflates less; Japan expansion confirmed; US wealth grows, but carmaker strike looms; global food prices fall; UST 10yr 4.26%; gold and oil ease; NZ$1 = 58.8 USc; TWI-5 = 68.5

Here's our summary of key economic events over the weekend that affect New Zealand, with news a bit of price stabilisation is returning to the Chinese economy.

Chinese consumer price inflation came in little-changed for August. It was up +0.3% from July, and up only +0.1% from a year ago. Overall demand remains low. Milk and lamb prices fell in the month, beef prices were unchanged from July. Year-on-year milk prices are essentially unchanged but beef and lamb prices were down almost -5%.

Producer prices fell again in China but in August this fall was less than in any month since March on a year-ago basis. They were essentially unchanged from a month ago which is the 'best' they have been since October last year.

The Japanese economy expanded +1.2% in Q2-2023 from the prior quarter, compared with a flash reading of a +1.5% gain and after a downwardly revised +0.9% rise in Q1. This was the second straight quarter of growth, coming slightly less than market forecasts of a +1.3% rise, and despite being the fastest growth for a year, it was downgraded because of weaker-than-expected household consumption, and investment. Year-on-year, the Japanese economy was +2.0% larger, although the Q2-2023 grew at an annualised +4.8% rate, so relatively fast recently. Just not as fast as earlier indicated.

The Americans reported that their household net worth rose to a record US$154 tln in Q2-2023, a rise of +4.8% in a year. They managed that because their household liabilities only rose +3.6% in the same period. Helping is the surprisingly quick recovery suggesting that the residential real-estate downturn is turning out to be shorter and shallower than expected.

US consumer credit rose a modest +US$10.4 bln in July, a second month with a solid but unspectacular rise. Household debt isn't an overall problem for them.

Meanwhile, under-scrutiny American regional banks saw their profits and deposits broadly steady in Q2-2023, suggesting the turmoil earlier in the year has eased considerably. But a regulator watch is still on for unrealised losses, especially around commercial property loans.

There is a major strike threat at American carmakers that we should keep an eye on however.

And also worth noting, Fed whisperer Timiraos says officials are now leaning to a rate pause at their September 21 meeting in ten days.

The Canadian economy added almost +40,000 new jobs in August, far exceeding market expectations of a +15,000 increase. Full-time work rose +32,000 and part-time jobs increased by +8,000 in the month from July. But there were some notable distortions. The number of self employed rose by +50,000. And the overall population rose +103,000 in the month. That meant that their jobless rate stayed at a relatively high 5.5%. Those in jobs saw their pay rise +5.5% from a year ago, and well above their inflation rate of +3.3%.

Meanwhile, global food prices fell -2.1% in August to now be at their lowest since April 2021. These prices are now -25% below their peak in March 2022. A key reason for the latest fall is the retreating dairy price which was down -4% as the world seems to have a dairy surplus now. Meat prices are falling too, related to the fall in grain feed prices.

The UST 10yr yield starts today unchanged at 4.26%. Their key 2-10 yield curve is still inverted at -73 bps. And their 1-5 curve is now at -102 bps. Their 3 mth-10yr curve inversion is still inverted at -113 bps. The Australian 10 year bond yield is now at 4.12% and unchanged from Saturday. The China 10 year bond rate is little-changed at 2.68%. And the NZ Government 10 year bond rate is now at 5.00% and also unchanged from Saturday.

The price of gold will start today at just on US$1919/oz and down -US$1 from Saturday. But that is down -US$20 from a week ago.

And oil prices are down -50 USc from Saturday at just on US$86.50/bbl in the US. The international Brent price is now down -US$1 at just over US$90/bbl. 

In Australia, 3-week strike action at natural gas facilities in WA, responsible for about 6% of the world’s supply of that fuel, came as talks over pay and work conditions failed and both sides dug in. Workers are currently paid between AU$231,000 to AU$373,000, including base salary, allowances and 16% superannuation, on a 10-week roster structured two weeks on, two weeks off, two weeks on and then four weeks off. They work 42 ordinary hours a week and no more than 26 weeks a year. They are seeking a pay and conditions increase so that labour costs would jump by +49%.

The Kiwi dollar starts today little-changed from Saturday at 58.8 USc. Against the Aussie we are starting the week at 92.3 AUc. Against the euro we are unchanged at 55 euro cents. That all means the TWI-5 is still at 68.5. A week ago it was at 68.7, so very little changed from then.

The bitcoin price is a little lower from this time Saturday, and is now at US$25,685, a net fall of just -0.5% over the weekend. Volatility over the past 24 hours has been very low at just on +/-0.4%.

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