Here's our summary of key economic events overnight that affect New Zealand with news it is Friday the 13th, so don't expect too much from the day.
The actual number of American jobless claims last week were +178,000, a one year low, taking the total number of people on these benefits to 1.71 mln, a nine month low. But the seasonally adjusted level reported was +230,000. It is unclear why the variance is so large this week.
Meanwhile, American producer prices rose +1.7% in the year to August, the lowest in six months, easing from a downwardly revised +2.1% gain in July and below market expectations of +1.8%. Their 'core' PPI rose +2.4% however emphasising the role much cheaper energy costs are playing in keeping inflation down.
The September USDA WASDE report confirmed global wheat and rice production will be higher than expected earlier in the year, coarse grains slightly less. They also say American beef imports will rise on rising demand. American milk production is expected to slip on lower local production.
There was another well-supported US Treasury 30 year bond auction overnight delivering a 3.95% median yield. That is down sharply from the 4.22% yield at the prior equivalent event a month ago.
India's inflation rate rose to 3.65% in August from an upwardly revised 3.60% in July (which was the lowest since August 2019). But the August level was above forecasts of 3.55%.. However, these levels are below the RBI's targets, and while food prices are still rising at a +5.7% rate, that is down from year-ago levels of +9.9%. It is this base effect change that is making overall price increases look low.
Meanwhile, India's July industrial production was up +4.8%, about the average level it has been for all of 2024.
In China, markets are expecting some significant cuts for interest rates for home loan borrowers soon. These were signaled earlier, but are now imminent. At the same time Beijing is rounding up investment bankers, taking passports, and investigating them for 'corruption'. Despite all this, their government bond sector is rallying sharply today in defiance of Beijing's efforts to calm matters. Equity prices are falling, also on the uncertainty, and in contrast to what is happening in other global markets.
As expected the ECB cut its policy rates but they varied a lot this time by type of facility. The deposit rate was cut by -25 bps to 3.50%. But the main refinancing operations rate and the marginal lending facility rate were lowered to 3.65% and 3.90%, both from 4.00%, so these cuts are larger. They see a better inflation outlook and "better transmission of policy". They are also facing a weaker level of economic activity in the bloc. Their balance sheet reductions continue at an unchanged pace.
It seems the Australian central bank is right to be sceptical inflation is trending in the way they need it to. Consumer inflation expectations are still at 4.4% in September in Australia, only slightly down from August's 4-month high of 4.5%. Perhaps the situation will turn soon. The same survey showed that respondents expected total pay was expected to grow by just +1.4% over the next 12 months.
World container freight rates fell a rather sharp -13% last week as the shipping industry adjusts to the Suez Canal risks, and the Panama Canal drought impacts fade. Prices were down -13% last week from the week before to be only about double what they were a year ago. This is counted as 'progress'. The biggest falls were for cargoes outbound from China. But bulk freight rates are rising, up +3% over the past week but they are +60% higher than a year ago
The UST 10yr yield is now at just on 3.68% and up +3 bps from yesterday. The key 2-10 yield curve is +2 bps positive. Their 1-5 curve inversion is marginally less at -65 bps. And their 3 mth-10yr curve inversion is less as well at -139 bps. The Australian 10 year bond yield starts today at 3.88% and down -1 bp. The China 10 year bond rate is at 2.07%, and down a very sharp -6 bps and probably representing a failure of Beijing to halt its unwanted bond rally. The NZ Government 10 year bond rate is now just on 4.18% and unchanged.
Wall Street is up another +0.7% on the S&P500, adding to yesterday's similar rise. Overnight, European markets rose +0.5% except Frankfurt which was up +1.0%. Tokyo ended yesterday up a very strong +3.4%. Hong Kong was up +0.8% buut Shanghai was down again, down -0.2% this time. Singapore rose another +0.7%. The ASX200 ended its Thursday session up a good +1.1%. The NZX50 ended even better, up +1.5%.
The price of gold will start today up a significant +US$40 from yesterday at US$2554/oz and almost touching its record high of US$2555 on September 12, 2024. In fact, as we publish, it may have bested that ATH level.
Oil prices are up another +US$1.50 at just on US$69/bbl in the US while the international Brent price is now just over US$72/bbl.
The Kiwi dollar starts today at 61.6 USc and +30 bps firmer from this time yesterday. Against the Aussie we are down -10 bps at 91.9 AUc. Against the euro we are +20 bps firmer at 55.8 euro cents. That all means our TWI-5 starts today at 69.5, and +20 bps higher from yesterday.
The bitcoin price starts today at US$58,242 and up almost +1.0% from this time yesterday. Volatility over the past 24 hours has been modest at just under +/- 1.1%.
Daily exchange rates
Select chart tabs
The easiest place to stay up with event risk is by following our Economic Calendar here ».
8 Comments
“Since arriving in China, meetings founders and VCs have left me with a very dim view of the current state affairs.
Things are so bad.
In 2018, 51,302 new startups were founded. Last year, that number was down to 1,202. It took a while for that number to sink in.
At the crux of the problem is the execution of redemption clauses, which makes founders personally responsible to buy back shares from investors if the company doesn't go public. VCs are now checking founders' bank accounts to ensure they can return money.
Failed founders are getting dragged through the courts. One VC described the industry as a "debt chasing monster". Their spouses and parents can be implicated. They can be put on travel ban lists and find it difficult to find new work. Why take the risk?”
@EleanorOlcott
“The whole industry has just died before our eyes,” the executive continues. “The entrepreneurial spirit is dead. It is very sad to see.”
https://www.ft.com/content/1e9e7544-974c-4662-a901-d30c4ab56eb7
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.