Here's our summary of key economic events overnight that affect New Zealand with news commodity prices are tumbling today on the twin slowdowns in the US and especially China. With it, commodity currencies are being marked down.
First up today, the US economy created fewer new jobs in August than expected, adding +142,000 in August, and below market expectations of +160,000. July's increase was revised sharply lower. Most job gains occurred in construction and healthcare while manufacturing employment declined. But their jobless rate edged lower to 4.2% in August from 4.3% in July.
But we do need to note that the +142,000 rise is the seasonally-adjusted number. The actual rise is +263,000 from July which is pretty healthy, it must be said. From a year ago, payrolls are +2.3 mln larger. The economic impact of +2.3 mln more people employed is not insignificant.
Weekly earnings are up +3.5% from a year ago, hourly earnings up a bit more, and that was better than expected.
The US job market is cooling, but not cracking. This fact will give the US Fed more room to manoeuver at their meeting on September 19, in twelve days time.
Canada added +22,000 jobs in August, a recovery from the small dip in July. Almost all the August increase was for women.
But their local, and widely-watched Ivey PMI fell sharply in August, down to its lowest level since December 2020. But it wasn't matched by the internationally benchmarked S&P/Markit version which reported a stable situation. One of them isn't right.
In China, the end is nigh for struggling developer China Vanke. They reported terrible July metrics, and their liquidity situation worsened notably. Not helping them, China's regional banks are moving faster to quit nonperforming real estate loans. That is leaving the majors holding the bag as the government urges them to lend more to support a weak housing market. It is hard to see how the management of their real estate crisi won't end very badly. China's neighbours are increasingly concerned.
Germany reported a very tough situation for industrial production in July, down -5.3% from the sdame month a year ago and worse than the June result. But at least exports are limiting the downside. These were up +1.7% from June and that was a gain that was better than expected and one that clawed back its year-on-year dip.
In Australia, home loan activity for owner occupiers picked up in July, adding +AU$18.9 bln in the month and the most in two years. For investors the rise was +AU$11.7 bln which was an even faster rate of increase and the most since January 2022.
World food prices actually dipped in July with declines in cereal and meat prices in the month. Dairy prices rose. They remain their lowest in three years. Good agricultural conditions have persisted for some time now, boosting output. Updated forecasts for global cereal production point to a weather-driven drop in coarse grains offset by expected increases for wheat and rice. So far there is no indication yet that the world can't feed itself, and more than adequately, despite some high-profile pressures
The UST 10yr yield is now at just on 3.72% and down another -1 bp from yesterday. That is a -20 bps fall for the week The key 2-10 yield curve is now a positive +6 bps, the most since June 2022. Their 1-5 curve inversion is less at -63 bps. But their 3 mth-10yr curve inversion is unchanged at -144 bps. The Australian 10 year bond yield starts today at 3.98% and up +3 bps. The China 10 year bond rate is at 2.15%, up +4 bps after Beijing moved to 'correct' the market. The NZ Government 10 year bond rate is now just on 4.20% and down -1 bp from this time yesterday, but down -10 bps for the week.
Wall Street has moved lower with the S&P500 down -1.7% on the US jobs report. That puts it -3.6% lower for the week. Overnight, European markets were all down about -1%. Their weekly drop is similar to New York. Tokyo ended its Friday trade down a further -0.7% to be -6.8% lower for their week. Hong Kong didn't trade due to a weather shutdown but ended its week down -2.3% lower. And Shanghai fell -0.8% yesterday for a weekly drop of -2.4%. Singapore was was down just -0.1%. The ASX200 rose +0.4% in its Friday trade to be -1.0% lower for the week. And the NZX50 fell -0.5% in Friday trade but was up +1.4% for the week, outshining all the other bourses we monitor.
The Fear & Greed Index ends the week in the 'fear' range, from last week's 'greed' range, so quite a big shift.
The price of gold will start today down -US$20 from yesterday at US$2493/oz, but only down -US$8/oz from a week ago.
Oil prices are -US$1 lower at just under US$68/bbl in the US while the international Brent price is now at just on US$71.50/bbl. Both are down -US$5.50/bbl on a week or -7.5%.
The Kiwi dollar starts today down more than -½c from yesterday at 61.7 USc. That is -¾c lower in a week. Against the Aussie we are +10 bps firmer at 92.5 AUc. Against the euro we are also down -¼c at 55.7 euro cents. That all means our TWI-5 starts today at 69.7 and down -30 bps from yesterday, down -75 bps in a week.
The bitcoin price starts today at US$53,516 and down -5.0% from this time yesterday. And it is down -8.8% from this time last week. Volatility over the past 24 hours has been high at just on +/- 3.3%.
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41 Comments
So with the world's 3 powerhouse economic zones in stagnation and decline........not even God best endeavours can Defend the NZ "waif economy" from the comming hurricane.
The mild outer storm bands are just being felt now, NZ wide.
How will the humble, DDDebt overladen, garden variety Kiwi pay his his higher food, energy and insurance bills, etc ...... that's right, sell the BROKEN ATM, THAT IS NO LONGER GOING TO SPIT OUT CASH. Sell the house, sell the rental, sell the CRE unit.
Rentals are just getting cheaper and cheaper now. Wonderfully good for the hapless have-nots!
NZ Property Ponzi snake downside, part 2, about to continue.
The Irish property crash has nothing on what's happening in NZ Ponzieconomy, from 2021 to 2028.
Property prices back to 2012 to 2015 levels, by 2027/2028!
Ye wild specuvesters have been warned!
Watch them wail and writhe in their own foolish and banished investments, depending on rentier enslavement, that is now in tatters.
All will be well, come 2030, hope for the future remains.
New motto for TA, the greasy Comb: "Handle the hurty, all will be perky - come 2030"
Haha. Very zen
yes, the economy is up shit creek. Some will unfortunately really suffer. But most will be kind of ok.
by late next year there will be a bit of life back in our property- reliant economy
what I am pretty sure of though is that the boom times won’t be back and people are going to have to live more within their means
Our inflation figure is just a net amount, you can have some products increasing in cost while others are decreasing.
Example: domestic production, for instance housing, has increased in cost long term, while at the same time imported goods like consumer technology and household appliances have done a lot of depreciation over the past decades.
You are confusing price setting with inflation/deflation....one is a function of supply and demand the other is the quantity of credit (money) available to an economy.
The money supply (and velocity) is either expanding or contracting....or perhaps by good fortune, neither....it cannot do both at once.
You're right. We have one of the highest household debt coupled with the most indebted councils in the world.
For an economy that is incurring large annual current account deficits (>6%), that huge stockpile of debt amid a global slowdown/decline is a huge reason to worry.
Meanwhile we have a government is spending less on critical infrastructure and services while encouraging private interests to take on more debt to buy houses. Recipe for absolute disaster!
S&P considered New Zealand's local government debt to be among the highest in the world at 180 percent of gross operating revenue on average, and forecast to rise further to a cap of 350 percent of gross operating revenue to pay for critical infrastructure such as water, roads and earthquake strengthening
Other economies with high household debt levels are in much better current account positions than us (Australia, Norway, Netherlands, Denmark).
Is that true about the debt ? wow.
A massive chunk of that debt goes towards maintaining roads. Central govt pays some money towards helping council's cover that cost but the coalition has cut back that maintenance funding. Not only that, but they are now commiting to borrow even more to build even more massive roads. Simeon Brown is a moron, he stood on an ideological platform and now he can't change course without admitting he was completely wrong.
They will try to hide the debt as much as they can, cutting back funding for council's to force them to raise rates or borrow more or hide it in PPPs (where we all end up paying more than if the govt had just built it themselves).
We are living beyond our means in terms of roading. We cannot afford to maintain what we have and instead of cutting back we're building even more.
The only fiscally/financially sustainable alternative is to invest in public transport, rail, walking and cycling.
Guess what the moron did? He cancelled investment in those options.
We get some fantastic bike racks though. When are road user charges for bikes going to kick in?
"Wellington ratepayers have shelled out out more than $550,000 on the upgrade of a 32 metre laneway to accommodate a new designer bike rack and two extra motorbike parks.
...Councillor Diane Calvert blasted the spend as an “unbelievable waste”.“And especially when there is an empty bike rack 50m up the road outside council.”
Spent some time wondering how the US is going to counter efforts from Brics nations at breaking the influence of the USD . Some evidence Turkey might be swinging to Brics ... I'd imagine the US will be watching Gold like an Eagle... and not wanting runaway values .. Could it be that in the background a quiet but concerted battle has already begun against the USD...?
When Dick Cheney is voting for the democrats because the alternative is too right-wing, you know the US is in deep shit. The rise of dictators always seems impossible/improbable until it actually happens, one small step at a time.
https://www.nbcnews.com/politics/2024-election/dick-cheney-kamala-harri…
This is exactly right. At the present time the people in the USA would vote for the Devil himself if they knew they would be "Better off". Total desperation over there to try and stop a sinking ship. If Kamala is Communist Kamala then Trump is Hitler reincarnated.
Trump is a bit of an empty vessel, not overly principled or ideological. He's really just about Trump, and will tell people what they want to hear to curry favour.
Kamala isn't a communist either, just a puppet figurehead representing vested interests, with a left leaning visage.
Is having Dick Cheney’s support meant to bolster your parties popularity? For me, this paints the Dems in an even more negative light when it is more attractive to such a swamp creature than the original swamp it crawled out from.
I spent time living in America and would have identified myself as a Democrat at the time. I wouldn’t say that it is the Republicans who have become too right-wing as you say, but more that the Democratic have just distanced them so far from the centre now that from their new (woke) perspective, anybody centre or centre right is now a right-wing extremist. Surprisingly I would now identify myself as an Independent/Republican as the Dems have gone way too far left - they don’t represent anything that their party used to and was founded upon (ie it is now a party of the elites, big business, Wall Street, big tech, pharmaceutical companies, the military industrial complex - not about fighting for the prosperity of the middle-class/working class).
Anyone who has read 1984 should be terrified of the current trajectory the Democrats are taking the world down.
And I’m not a Trump supporter - I don’t think he’s got the right temperament to be President but I currently see him as being far less crazy/harmful than the current Dems which going back a few years ago I would have never thought I would say.
I remember meeting an American climate change expert, some 7-8 years ago. I remember saying to her that on matters global affairs, environment etc that while not perfect, the dems were surely far preferable to the Republicans. She said pretty bluntly ‘no not really’.
Really the so called left and the right are usually not very far apart whatsoever.
I could provide a definition which you would disagree with and it would only result in a non-productive war of words - and as it’s a Saturday it’s not in my interests to get involved in such an argument.
Perhaps Republicans shouldn’t take anyone seriously who claims they are the ‘far-right’ even though in my opinion they haven’t really changed that much since I was living in America (I keep in touch with many who still live there - I was in a Republican state)- but the Democrats certainly have appeared to have shifted a hell of a lot further to the left in that time.
What a the largest companies on the US stock exchange and what political bias do you think they have?
And isn’t is strange how much the Dems hate Twitter now that they can’t strangle free speech on that platform via government interference in those platforms (and how Zuck has come out saying that this is exactly what was happening at Meta - and obviously on Twitter before Musk took over and refused to stop the Dems from violating first amendment rights).
Whew, I was getting worried about those poor mom and pop reinsurance companies.
"It’s early September – what should be the busiest stretch of hurricane season. Forecasters predicted this one was going to be bad: storm after storm, the most bullish forecasts on record.
Instead, the Atlantic Ocean is enveloped in a rare and strange calm that has flummoxed forecasters and reset their expectations. And the whole thing could be a glimpse at what’s to come as the planet gets hotter.
Despite ideal conditions that fueled pre-season predictions of upwards of 20 named storms, the immediate prospects for one are low, and none have formed in the Atlantic since Ernesto in mid-August – a streak unmatched in 56 years."
https://edition.cnn.com/2024/09/06/weather/hurricane-season-atlantic-st…
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