Here's our summary of key economic events over the weekend that affect New Zealand with news China's deflation pressures keep on coming. And in the US disinflation rolls on, which they hope will end soon.
This coming week will be another one with chunky data releases. The biggest will be on Wednesday, our own CPI result for the Q3-2024 period (Markets expect 2.0%). That that will follow the Tuesday's update of the September REINZ results.
We won't be the only country reporting inflation data; we also get that from Canada, India and Japan this week. At the end of the week, the ECB will be reviewing its policy interest rate. And all week we will be getting American Q3 earnings reports.
China will report its Q3-2024 GDP result on Friday, likely to fall well short of its 5% target.
Over this weekend, China released sets of key data. The tiny bit of consumer price inflation they had disappeared in September, up now only +0.4% from a year ago. Beef, lamb, and milk prices all went backwards again. Their producer prices deflated at a faster rate. And we are now waiting for their new yuan loan data which isn't expected to be very strong (about +¥1 tln, and less than half the June level. So far, debt-induced growth hasn't worked).
Meanwhile Chinese Ministry of Finance officials announced some more modest steps to "support the economy" and signaled much more is to come. It was a much-anticipated set-piece that left observers, and markets, underwhelmed.
Key banks made simultaneous coordinated moves - signaled a while ago to be fair - to cut mortgage borrowing costs, as a practical measure to reduce the pressure on homeowner household budgets. They will come into effect in the last week of October.
And coming up some time this week, the Chinese central bank is expected to signal lower wholesale borrowing costs in its 1-Year MLF announcement.
In South Korea, they have started cutting their policy rates too, although not as aggressively as New Zealand. The Bank of Korea policy rate is now 3.25% after its first rate cut (-25 bps) since May 2020. That came after data showed their GDP shrank in Q2-2024 and their September inflation slowed to 1.6%, the lowest since February 2021.
India's industrial production took a surprise drop in August from a year ago, its first retreat since October 2022. Few saw that coming. And they downwardly revised the +4.7% rise in July.
Interestingly, the Indian currency is under pressure, and outflow levels have been high. The Indian rupee has hit a record low against the US Dollar, (but against the NZD it has been pretty flat since 2020).
In the US, producer prices hardly rose in September. US factory gate prices were flat in the month from August and missing expectations of a +0.1% rise. On an annual basis, PPI inflation eased to a 7-month low of 1.8%.
US consumer sentiment was little-changed in October according to the University of Michigan survey, holding at a level it has broadly been at since May. There was a slight dip from the prior month, something that is probably just related to election uncertainties.
For those who follow such things, we can report no surprises in the October update of the USDA WASDE report. But they did raise their beef import forecasts marginally again, and lowered their US milk production forecasts, again.
Canada reported a good +47,000 rise in employment in September, almost double what was expected. Better still, full-time jobs rose +112,000 while part-time roles shrank -65,000. Their jobless rate slipped to 6.5% when a rise was anticipated.
Ratings agency Fitch has downgraded their sovereign rating for France from 'Stable' to 'Negative', but still at AA-. They say “Fiscal policy risks have increased since our last review". (Fitch have New Zealand at AA+, Stable.)
The UST 10yr yield is now at just on 4.07% and unchanged from Saturday. A week ago it was at 3.99% so up +8 bps since then. The key 2-10 yield curve is positive, now by +12 bps. Their 1-5 curve inversion is inverted by -31 bps. And their 3 mth-10yr curve inversion now at -76 bps. The Australian 10 year bond yield starts today at 4.23% and down -7 bps. The China 10 year bond rate is at 2.15% and unchanged. The NZ Government 10 year bond rate is just under 4.43%, unchanged from this time Saturday, but up +14 bps from a week ago.
The price of gold will start today at US$2657/oz and down -US$3 from this time Saturday. That is up +US$8 from a week ago.
Oil prices are holding at just on US$75.50/bbl in the US while the international Brent price is still at US$79/bbl. A week ago these prices were at these same levels, so no-change in a week.
The Kiwi dollar starts today at 61.1 USc and down a minor -10 bps from this time Saturday. Against the Aussie we are unchanged at 90.5 AUc. Against the euro we are also unchanged at 55.9 euro cents. That all means our TWI-5 starts today now at 69.3, and unchanged from Saturday at this time. But that is -40 bps lower than a week ago.
The bitcoin price starts today at US$62,627 and up +0.6% from this time Saturday. Volatility over the past 24 hours has been modest at just on +/- 1.1%.
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56 Comments
Israel is contemplating a strike on Iran's oil facilities and Iran vows to retaliate with attacks on UAE's oil producing assets. The US has now deployed missile, air and troop support to the region.
Whatever goes down between the aggressors, oil consumers are certainly going to feel the heat.
Whilst in Europe, I was asked if NZ was a safe place, because of the primitive, aggressive indigenous people they see every time NZ participates in an international event. This sounds crazy to us, but what image do we have of other countries? France = baguette, Japan = geisha and most can't make the difference between Switzerland and Sweden.
Why can we not project a more advanced, friendly image of NZ to the rest of the world?
"Yvil this is a finance page..not womens weekly…"
It is indeed a finance page Baywatch, and I suggest that there might be a better way to showcase NZ's economy, technology, entrepreneurship and finance to the rest of the world, than by displaying a primitive, agressive dance by scantily dressed people.
The context makes something culturally appropriate or not. Any immigrant knows that.
You get welcomed by a karanga, korero and waiata. You are challenged by a wero. You are supposed to be intimidated by haka, and sometimes honoured.
Don't blame various cultural expressions for the viewer's limited perspectives and ignorance of context. If they don't understand, the least you could do is help them Yvil.
I'm glad you asked Pa1nter.
Dominating the America's Cup is a show of immense skill and technological advancement for New Zealand. That's how we can showcase NZ's entrepreneurship. I doubt that the guys in grass skirts shouting aggressively had much to do with the design of our AC cup masterpiece.
Well you may not have thought your previous ramblings were racist but you really need to take a hard look at what you just said. Doubting someone's intelligence simply by their look? Classic racist.
And isn't Sir Ian Taylor still involved in presenting the graphics, well known Ngapuhi?
That is certainly true, but what do we know about Azerbaijan, Peru or Mali ? I suggest that, at best, most of us know one or two facts about these countries, even though they are bigger, more populated countries than NZ. The same applies to NZ, most other countries will know one or two things about NZ, so we have to be very careful how we showcase NZ to the rest of the world when we can.
And that seems to have been centred around:
- our unique indigenous culture
- or relative level of green-ness/natural landscape
- other minor aspects like our National Bird/coastline/produce
I'm not sure how we could promote ourselves as being developed/advanced in a way that'd be distinctive from the large number of other nations that are more centred around development and technology.
Why can we not project a more advanced, friendly image of NZ to the rest of the world?
Few anecdotes when asking people overseas about NZ (or mentioning that you're from NZ):
- many regions view us as peaceful, off the back of Jacindas response to the mosque shootings
- fairly commonly in Europe, locals envied our distance from the Russia/Ukraine conflict
- most places view NZ as clean and uncluttered/under developed
I can't see how we could promote ourselves as overly advanced, but with the way "progress" is unfolding, maybe that's not a bad thing
Actually, I agree with him to some extent.
While I've enjoyed going to Kapa Haka , and nothing better than a Haka at a Tangi, I do see the Haka by the All Blacks etc , as having become unnecessarily violent. such actions performed by a gang in the streets would have Mitchell etc foaming.
Markets expect 2% in NZ! I called that as a possibility months ago due to last Septembers 1.6% quarter falling out, around the time the RBNZ were saying they may need to hike the OCR. How did they get it so wrong? Or were they just playing games? How come we are still so far above neutral? What if it comes in below 2% with the RBNZs foot still ramming the brake down at the expense of jobs and growth?
But Jimbo…haven’t you read the comments on here over the last couple of months…the RBNZ had better be careful, the cuts they’ve made are going to fire up inflation 😭
RBNZ literally & somewhat impressively f**ked it in every direction, down too low, up to slow, held too long 😂
How much control does RBNZ have over headline inflation. Non-tradable inflation has generally trended between 2.5% to 4% every year for a decade, which RBNZ has done squat to control.
Prices of oil and Chinese imports largely dictate headline inflation because we don't have domestic market tariffs/subsidies in NZ. If there is a global glut in either of those, headline inflation trends low and vice versa.
"New data from@msdgovtnz shows the number of children living in emergency housing has fallen below 1,000 for the first time in years. The 1,038 households in EH is at a 6-year low, approaching the govt's 2030 target of 800. The public housing wait list is also at 4-year lows."
"Council delays release of Auckland property valuations. Auckland homeowners can expect a likely dip in their council valuations but will have to wait to find out until the city-wide valuations are released early next year."
Don't want to frighten property owners, do we! Best we extend-and-pretend, and with any luck things will have improved by the time the news hits.
The formula in Christchurch is that the CCC sets the total rate take annually and within the calculation each property is charged pro rata to its value. Resultantly then, usually the higher the value the more the rates charge. Proportionally that of course continues whether property values rise or fall.There is quite some inequity in this because it is claimed as a charge for goods and services but there are obvious anomalies where say one household of say five occupants will use much more of the services etc but pay less rates than a house of two using less. By its nature this distortion compounds on every rates increase and this factor is then increased by central governments adding GST. Yo will find that no one involved in either local or central government want to talk about any of that.
bw
Not Council per se deciding to delay the release of property valuations for some spurious reason as you suggest, but rather " . . . the Valuer-General audits property valuations and has requested some additional work on the Auckland valuations prior to public release,”
So the Valuer-General and not Council delaying RV release and I cant see any vested interest for the AG to delay their release. The validity of the reason you give is suspect as other regions (e.g. Napier) have had the release of their RVs which were down . . . but lets ignore reality and put a conspiracy theory out there.
CONF
The point that still stands is that the post is based on an ignorance of the process and the assertion is rubbish.
It is not Auckland Council who release RV information - it is relaeased by QV which is totally independently of Council. The Council has no role in releasing or the timing of RV information - anyone with a basic experience with property would know this.
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