Here's our summary of key economic events overnight that affect New Zealand with news an expansion and the inevitable retaliations in the Israel/Gaza/Lebanon/Yemen flashpoints are now having an impact on global oil prices. It is also casting a pall over global sentiment as fears mounts for an even wider conflict. The shift toward safe-haven currencies has hurt the NZD.
But first, the overnight dairy auction brought a +1.2% rise in USD terms, on the back of a +3.0% rise in WMP. There were good (+3.8%) gains for cheddar cheese as well. But most other products fell. In NZD terms, overall prices slipped -0.3%. Volumes sold were good. But this full auction broadly reflected last week's Pulse event for SMP and WMP.
In the US, their retail impulse bounced back last week to be +5.3% higher than the same week a year ago.
The September ISM factory PMI is still contracting slightly, little-changed from August. The dockworker strike isn't helping sentiment by American manufacturers. The S&P Global/Markit PMI for the US was more negative. Both report lower new order levels.
But the Logistics Managers Index (LMI) jumped to its highest growth rate in the logistics sector in two years. They see rising demand for these services, but the transportation component was unchanged.
Job openings rose in August from the July lower levels, but even though that rise was more than expected they are still in an easing trend, one that started in early 2022. Their quit rate fell.
Yesterday we reported a soft factory report for the Texas manufacturing sector and its oil patch in September. Today we can note that the region's service sector was expanding, and by a bit more than expected.
And we should note that Fed boss Powell yesterday emphasised that the recent 50 bps rate cut was probably just a one-off and that future changes will be "a more neutral stance" after that 'recalibration'.
China is now on holiday, and will be for the next week.
Eurozone inflation fell quite quickly in September, to just 1.8%, its lowest level since April 2021. Mostly this was driven by sharply lower energy costs.
In Australia, retail sales rose in September more than expected to be +3.1% higher than a year ago - which is their best result for more than a year. But it is not that great because inflation is running at 2.7% there. But at least is is better than inflation finally. Sanguine weather conditions is getting the credit for this improvement
Market confidence in new home building in Australia has improved in recent months, as investors and owner occupiers return to the market. And that is now showing up in residential building consent data, which was +3.6% above year-ago levels.
But CoreLogic says their housing market lost momentum in August, with insignificant overall changes in prices. Even Perth's monthly change was less than 2%, and that has been the epicenter of frothy housing prices.
Globally, the market for corporate bond debt rose sharply in September. Bloomberg is reporting that more than 1200 issuers sold more than US$600 bln of bonds in the month, the most since these records began 20 years ago. The rush seems to have been driven by lower interest rates and rising uncertainty including of the US presidential election.
The UST 10yr yield is now at just on 3.75% and down -3 bps from yesterday. The key 2-10 yield curve is less at +12 bps positive. Their 1-5 curve inversion is now inverted by -50 bps. And their 3 mth-10yr curve inversion is now at -114 bps. The Australian 10 year bond yield starts today at 3.95% and down -4 bps. The China 10 year bond rate is at 2.16% and down -2 bps. The NZ Government 10 year bond rate is now just on 4.26% and down -2 bps from yesterday.
Wall Street is in its Tuesday session on the S&P500 and is down -0.6%. But European equity markets were mixed with London up +0.5% and Paris down -0.8%. Tokyo finished yesterday bouncing back +1.9%. Hong Kong and Shanghai were both closed for a public holiday. Singapore was down a minor -0.1%. The ASX200 ended its Tuesday down -0.7%. But the NZX50 rose +0.3%.
The price of gold will start today at US$2670/oz and up +US$32 from yesterday, a new high.
Oil prices are up +US$2.50 at just over US$71/bbl in the US while the international Brent price is still just over US$74.50/bbl. The crazy Middle-East situation is now affecting this commodity.
And there have been moves higher for the price of many commodities, especially coal and steel. Zinc and nickel too. Some key food prices are turning up as well.
The Kiwi dollar starts today at 62.8 USc and down almost -1c from this time yesterday. Against the Aussie we are -40 bps lower at 91.4 AUc. Against the euro we have fallen -30 bps to 56.8 euro cents. That all means our TWI-5 starts today at just over 70.2, and down -70 bps from yesterday.
The bitcoin price starts today at US$62,020 and down another -2.3% from this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 1.9%.
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51 Comments
Regular reminder of how riddled with corruption this coalition is, it's an embarrassment for National to be associated with this sort of person
She claims HTPs have a “similar risk profiling to vapes” but official advice says the “evidence is clear that HTPs are more harmful than vaping” and also that there is no evidence they work for smoking cessation.
Costello says she has got her own “independent advice on the efficacy of HTPs as a smoking cessation tool” but she has declined to be interviewed and would not say where that came from.
https://www.nzherald.co.nz/nz/casey-costellos-tobacco-tax-cut-plan-stal…
I agree, what a stain she is. She is there to act in the best interest of her constituents and not Phillip Morris where, despite her denials, there is clearly some sort of cosy relationship.
Good old NZ, fast food outlets and vape shops. We need a party to stand up and do whats right for the country and unfortunately it appears it won't be Captain Underpants and his merry band of mercenaries.
Given that there's only been 3 Gnat PM's this century . . and that 2 of them ( Key & English ) had their hands super glued to their butts , you're completely utterly wrong ...
... Luxon is getting stuff done , lots of it , he's setting targets , and achieving most of them ... a far cry from the aimless wafflefest we saw from Ardern & Hipkins ...
( and , it's " worst " , not " worse " )
Bollocks he is.
He's waffling around the quarterdeck, ejaculating spin-approved soundbytes. While the ship is obviously sinking.
And no, it wasn't Labour's fault. But the difference between Key and this clown, is as obvious as that sinking. Trotter made a good point; 35,000 is a warning, this soon in their tenure, that the 'coalition' is in trouble. The joke is that the 35,000 were told by the MSM, that growth is both good and still possible. Wait until they realise they were told something other than the truth...
Convenient timing by our PM ......... reposting late night comment from phalanax
by phalanax | 2nd Oct 24, 1:52am
Your govt...working for you ...lol
https://www.nzherald.co.nz/nz/politics/revealed-christopher-luxon-avoid…
Disagree, the Coalition changed the brightline test back to two years from July 1 and along with reinstating interest deductibility (one of the first things they did), it shows where their priorities are and New Zealanders should be aware of that. I've also heard Luxon say he's "giving back" by being the PM but it's worth thinking about who it is he is giving back to.
"Is refreshing to hear than someone is actually making money on property."
Did Luxon create anything? Did he build anything?
No. He was nothing more than a rentier. i.e. using his accumulated capital to graft out a small rise.
Please explain how you think Luxon helped NZ Inc. with this display of self interest.
Iran’s actual targeting of urban Tel Aviv rather than military posts etc sets Israel a new challenge. Take it on the chin or retaliate in kind. Probably the former but there is no certainty that this is a one off strike of this nature by Iran. Missiles duel looks distinctly possible in which case worth wondering if Iran may have sold too many of the type to their pals in Russia?
It didn't start a year ago. Or even 76 years ago.
"The creation of Israel was a violent process that entailed the forced expulsion of hundreds of thousands of Palestinians from their homeland to establish a Jewish-majority state, as per the aspirations of the Zionist movement."
https://www.aljazeera.com/features/2017/5/23/the-nakba-did-not-start-or…
Yes. Post war anti-semitism meant that no matter how horrified they were over what the Nazis did, none of the allied powers really wanted to provide a haven for large numbers of Jews. The Balfour 'suggestion' was a welcome solution. But to make it happen, they were to many extents going to create just another wave of crimes against a different group of humanity. We reap the rewards of that arrogance today.
Israel dropped 70,000 tons of explosives on Gaza (more than WW2 bombings of London, Hamburg and Dreisden combined). They killed 500 civilians in the West Bank (no Hamas there). They blew up the Iranian embassy in Syria. They are invading Lebanon. Yes, Israel are escalating the war.
But Israel can restrain themselves to strictly military and 'political' targets if they want. Their missiles will be capable of fairly precise targeting.
Iran has been fostering a number of terrorist groups in the region for years now. Now they have crossed a line to become a direct actor, although it could be argued they had done this before. As for Hamas, I doubt that Israel will hold itself back too severely.
They're not trying to kill an idea PDK. They're sending a message to all comers that if you want to threaten Israels existence, Israel will bite back - hard!
I'm sort of surprised they haven't done it sooner. Its well understood that Iran is feeding the militant groups against Israel and Saudi in the region. Religion becomes very ugly when it is used thus. They would say it is a blasphemy if the other side did it, but of course they are soldiers of God! (yeah right!)
Precision weapons against underground tunnels under buildings will do that. Doesn't mean the hits weren't precisely targeted. Same as Lebanon. Unless they're extremely deep and nuke hardened, hiding in a hole in the ground today doesn't mean they can't reach out and touch you if they want to.
I think this point is often lost in much of the rhetoric we hear. Strikes can be both precise and indiscriminate. I would classify the recent strikes in Lebanon as such. 160,000 pounds of explosives precisely and indiscriminately targeted something like a dozen Hezbollah (and some other groups') leaders.
The indiscriminate bit is that Hezbollah and Hamas built their infrastructure underneath residential buildings and other place in towns and cities, using the innocent civilians as shields, in the hope that Israel will baulk at targeting them. The problem is they are forgetting their history; Israel has always fought back on the terrorists terms.
Most countries hold themselves to higher standards and try not to let their standards drop even in war. Israel on the other hand lets the terrorists write the rules and fights them using those rules, with every weapon they have got. They bring bigger guns, and more of them, bigger bombs and more of them and so on.
In Israel's defence, the west created the country. Hamas, the Houthis, and Hezbollah, and until recently only indirectly Iran all attacked them. Not the other way around. Israel is fundamentally correct that they are only defending their own safety and security.
No matter how I look at it I cannot see an easy and workable solution.
Regarding the building of military installations underneath civilian areas and infrastructure, it is only really an assumption that the motivation for this is to use civilians as shields. If you think that the fact that they are located there proves the 'human shields' motivation, then what can we say about the Israeli Command and Control Center known as 'Fortress Zion' (https://www.nytimes.com/2021/05/22/world/middleeast/israel-fortress-of-zion.html)? It is located directly underneath a civilian area and large apartment towers.
Military facilities all over the world are located in urban areas - often underground. It is not unusual. They are definitely not all built out in fields.
In my opinion the 'human shields' argument is simply a convenient excuse used by Israel to justify what are undoubtedly war crimes.
But it gets worse than that. Israel has been bombing residential buildings with hundreds of occupants because they believe military leaders (and in the case of Gaza, not even leaders) live there. Can you imagine the uproar if a tower block in Israel were bombed because there was a suspicion that Yoav Gallant resided there?
Quite frankly, in terms of the target selection by Israel, Hezbollah, and Iran in this current conflagration, it is only one side that can hope to justifiably make a claim to being discriminate when it comes to civilians. If you have a specific example that contradicts this, then please do share it.
The hypocrisy we are being subjected to - often repeated by Western leaders and media - is staggering.
You make a reasonable point about military structures in civilian areas. But then you lose it; Hamas and Hezbollah have been actively targeting civilians for years. Are these not 'War Crimes' considering they claim to be at war with Israel? And can you state to a certainty that the military leaders did not live in Gaza? So many have been killed in Israels strikes that it seems plenty did. It is proven that the political leaders did not. But what of Yahya Sinwar?
If they aren't why are Israel's actions to be considered so? There's plenty of hypocrisy to go around.
Knowing you enemy's capabilities is an essential criteria when going to war. To fail in this is almost certain to ensure you lose. Sun Tzu teaches that. Do you not think Hamas and Hezbollah understood all this when they chose to place themselves where they did? One thing is certain, Israel is providing a lot of reasons for the next generations of Palestinian children to join Hamas, Hezbollah and other groups.
Hamas and Hezbollah have been actively targeting civilians for years
I deliberately didn't mention Hamas in that context (their rocket attacks have undoubtedly been indiscriminate). I also specified the current conflagration (i.e. Israel Lebanon war - sorry if that wasn't clear). As far as I'm aware, Hezbollah has not targeted any civilians or civilian buildings. I'm definitely not claiming that past terrorist activity hasn't.
Edit to add:
As far as equivalent use of abhorrent and illegal tactics, I will accept that both sides (Iran/Hezbollah and Israel) are equivalent as soon as I see confirmation that Iran or Hezbollah has deliberately targeted a residential building. So far there is no evidence of that except on the part of the Israelis (something they have done over and over again and themselves proudly proclaim and attempt to justify).
Edit: Apologies if you were referring to a different incident from the one I talk about below.
I don't think it does. We are talking about deliberately targeting civilians and civilian infrastructure (especially residences).
It would be a huge stretch to argue that Hezbollah deliberately targeted Druze children in the Golan Heights. I'm willing to believe Hezbollah was responsible by way of making a mistake, but deliberately targeting a neighbouring muslim population that is under occupation and shows enmity towards the Israeli state would be practically unthinkable. Even so, it is far from established that it was a Hezbollah rocket strike and not a result of the Iron Dome. Locals in the area claim that Iron Dome missiles often fall (usually after interceptions) in the area.
I haven't been convinced of which side is responsible and generally think that the correct answer is 'both'. What would shed light would be independent verification of the weapon's remains. This hasn't happened. Why? Especially seeing as they are available and this incident was important enough to be used by the Israeli government as a reason for a large escalation in the war.
In fact, the whole incident involving the tragic deaths of the Druze children seems to me to provide the best evidence yet that Hezbollah has not been targeting civilians indiscriminately. If they had been, would this incident be the the most prominent example of civilian deaths caused by Hezbollah as it currently seems to be?
Having said all of that, if your argument is that Hezbollah rockets are so inaccurate or unreliable that any use of them is indiscriminate to some degree, then I would say that yes, that might be possible, but I think that the lack of any other such incidents suggests it's unlikely.
What do you expect when you've backed yourself into an historic corner in the room of religious fundamentalism. The JIC sects can wipe themselves out as far as I'm concerned - unfortunately they breed and it's the captured offspring who pay the price. When are the C's going to send in their offspring to take up a corner, is what I'm waiting for.
Yes and this is the concept. Reduce the infrastructure and prevent any form of human life getting a hold. Russia plays from the same rule book for Ukraine. Make the land between them and the others uninhabitable and thus creating a buffer zone. A zone 100 km plus deep if possible. Natural barriers are included such as mountains and seas. Drive any population behind the mountains or into the sea. Anything that moves in that area is obliterated.
Iran’s actual targeting of urban Tel Aviv rather than military posts etc
Do you have a reliable source for this? Keep in mind that many Israeli military targets are within urban Tel Aviv, so I'm really hoping for a citation for the "rather than military posts" part of that statement.
The distinction is drawn between this attack and that of the selective attack of about 300 missiles Iran launched on 14 April 2024, in retaliation for the Damascus assassination, and reported as being primarily military targets and with an amount of damage caused to them or it. This latest attack so far at least, is reported as being aimed at Tel Aviv across the board, and yes no reason to believe the military would be not included in that.
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