Here's our summary of key economic events overnight that affect New Zealand with news the market pressure on US benchmark interest rates is easing now.
First, an updated Dallas Fed survey showed the Texan manufacturing sector contracted less in November, the least in 2½ years. This was driven by the outlook mood which improved sharply, post election. But this may just be a partisan hope. New order levels actually fell to their worst shrinkage in a year, and continuing a two year trend of shrinkage in this oil-patch region.
And the broader Chicago Fed National Activity Index decreased in October from September to its lowest in nine months in a surprise result that was much worse than market forecasts. This index suggested US economic growth decreased. Current forecasts are that the US economy is growing at just under +2%, although the Atlanta Fed's GDPNow model has it at +2.6%. Anywhere else that sort of expansion would be considered very good for a developed economy.
There was another large US Treasury bond auction this morning, again very well supported. The yield was 4.24% at this event, and higher than the 4.07% median yield at the prior equivalent event a month ago - but not the sort of rise we have seen recently in other maturities.
Singapore’s inflation rate eased to 1.4% year-on-year in October from 2% in the previous month, and below market expectations of 1.8% gain. This marked the lowest inflation rate since March 2021, as prices moderated for housing and utilities.
Taiwanese retail stopped expanding in October after a long run of expansion that started in August 2021.
But Taiwanese industrial production is still growing at a healthy rate, although that rate of growth is slowing. It was up +8.5% in October from a year ago, down from an +11% rise in the year to September. A year ago in October 2023 it was falling -2.3%, so they have come a long way since then.
In China, their central bank injected ¥900 bln into financial institutions via a one-year medium-term lending facility yesterday at an unchanged rate of 2.0%. That compared with the ¥1.45 tln of MLF loans due this month, marking a net cash withdrawal of ¥550 bln.
After the March to August rises, the German IFO sentiment survey returned to its lows for other than the GFC or the pandemic. Analysts see a fading of strength in an economy that was only recently an engine of Europe. And overnight, ThyssenKrupp, the largest steel maker in Germany, said it would cut its workforce by up to 11,000 from the current 98,000, by 2030.
The UST 10yr yield is now at just on 4.29% and down -12 bps from this time yesterday. The key 2-10 yield curve has slipped back into a -1 bp inversion. Their 1-5 curve inversion is much more inverted, now by -19 bps. And their 3 mth-10yr curve inversion is also more inverted, now by -32 bps. The Australian 10 year bond yield starts today at 4.48% and down another -9 bps. The China 10 year bond rate is down -2 bps at 2.07%. The NZ Government 10 year bond rate is down -10 bps from this time yesterday at 4.57%.
Wall Street has started its truncated Thanksgiving week up +0.3% on the S&P500. Overnight European markets were in the range of non change in Paris, to up +0.5% in Frankfurt. Tokyo ended its Monday up +1.3%. Hong Kong hwever was down -0.4% and Shanghai was down -0.1%. Singapore ended down -0.4%. But the ASX200 ended up +0.3%. The NZX50 starred in this set, nearly matching Tokyo with a +1.2% rise.
The price of gold will start today at US$2631/oz and down -US$85 from this time yesterday.
Oil prices are down -US$2 at just over US$69/bbl in the US while the international Brent price is just over US$73/bbl.
The Kiwi dollar starts today at 58.4 USc and up a minor +10 bps from this time yesterday. Against the Aussie we are +20 bps higher at 89.9 AUc. Against the euro we down -20 bps at 55.8 euro cents. That all means our TWI-5 starts today at just on 68.2, down -10 bps from yesterday.
The bitcoin price starts today at US$95,648 and down -1.1% from this time yesterday. Volatility over the past 24 hours has been modest at +/- 1.3%.
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38 Comments
Just like children getting taller there has always been growth pdk. The thing is though, that during the last 100 years or so, the industrial, commercial and consumer growth of the human race has simply got itself strapped to a rocket. One might well wonder, if the humans hadn’t discovered the billions of resources that ancient nature had stored by the way of oil, what the world would be like today.
Only ever within available capacity Foxy. Even balloons burst if you over inflate them, and the envelope has no more give to give. I realise PDK tends to take an extreme view but that doesn't mean he is wrong. But considering Profile's post below, if that trend continues and there is no guarantee that it will, it could delay 'crunch time'. But nothing is ever for free when you throw in politics. What would Xi's, Putin's or some other power hungry numpty's reactions be when they realise a population decline is a real threat to their aspirations of power and immortality?
While a fight over resources may be a real possibility, the starter may be for other reasons.
However it is it is undeniable that oil and mostly burning it has catalysed change even more than the industrial revolution. Just like predecessors, stone, bronze, iron ages we are all now living in the age of oil and humanity would now be hard pressed to live without it. Just think about the military for a start. Steam powered aeroplanes or tanks or even trucks, don’t think so. The internal combustion engine, and similar, revolutionised everything in sight and beyond.
we are all now living in the age of oil and humanity would now be hard pressed to live without it.
*will* be hard pressed to live without it. It's finite, it will run out. It will run out more quickly than most people expect because we are taking a bigger chunk of it each year.
If you have a 100 million in savings and start by taking out 100K a year, it seems like you have plenty but if you double the amount you take out each year (because everyone in the world is trying to match the super rich) that 100 million doesn't last very long.
To be fair, his post doesn't suggest resource shortages (although I'm sure he'll mention it sometime soon).
The evidence? We have out of this world abundance and personal security. Yet society is getting more fat, tired, sad, and anxious. We don't even want to procreate anymore.
We don't know where we're going, or why. We're just rapidly changing everything, assuming it'll end up somewhere better.
The is no evidence of any resources are in short supply - other than babies. "Despite tremendous population growth in the last century, the planet is richer and better fed than ever before—and natural resources are more plentiful and less expensive (after adjusting for inflation) than ever before."
https://www.foreignaffairs.com/world/age-depopulation-surviving-world-g…
https://www.researchgate.net/profile/Simon-Michaux-2/publication/351712…
https://www.unep.org/resources/Global-Resource-Outlook-2024
You pen-name perhaps doesn't reflect your scoping...
The evidence is that we live on a rock flying through space with limited resources that will not support unlimited population growth or eventually not even current numbers. Sooner or later its pretty much all gone and you will have to rely on renewables making renewables and it will simply not sustain the world as we know it.
With gas supplies dwindling, over a million households and commercial users along NZ's piped gas network will be forced to spend 7k to 20k to replace gas appliances with electrical ones.
I did a quick back of envelope calculation. If all households using piped gas in NZ switched to electricity, we would require an additional 6TWh of energy each year, despite an optimistic 2.5x factor applied for efficiency gain from heat losses.
That would put immense strain on our already stretched power system.
Competing with a growing list of countries?
All resorce-endowed countries start out as exporters. They export more and more, while using more and more internally. Inevitably, in all cases, their supply-rate peaks, fter which they become net importers.
Which, of course, every country cannot be...
Phasing out papermaking at Kinleith will kick the can a couple of years further down the road. Chemical pulpmaking is mainly self sufficient in energy. See: https://www.gasindustry.co.nz/data/gas-production-and-consumption/
But...again it comes with a loss of 200+ well paid rural jobs.
Good take on the current state of the OCR/Interest rates
https://youtu.be/ZMZkDh3SPRw?si=aVujoz13aHUYrSCK
Interesting to see that the current average mortgage interest rates is only 4.6%
...humans are about to enter a new era of history. Call it “the age of depopulation.” For the first time since the Black Death in the 1300s, the planetary population will decline. But whereas the last implosion was caused by a deadly disease borne by fleas, the coming one will be entirely due to choices made by people.
...Just two generations ago, governments, pundits, and global institutions were panicking about a population explosion, fearing mass starvation and immiseration as a result of childbearing in poor countries. In hindsight, that panic was bizarrely overblown. The so-called population explosion was in reality a testament to increases in life expectancy owing to better public health practices and access to health care. Despite tremendous population growth in the last century, the planet is richer and better fed than ever before—and natural resources are more plentiful and less expensive (after adjusting for inflation) than ever before.
...Should South Korea’s current fertility trends persist, the country’s population will continue to decline by over three percent per year—crashing by 95 percent over the course of a century. What is on track to happen in South Korea offers a foretaste of what lies in store for the rest of the world.
https://www.foreignaffairs.com/world/age-depopulation-surviving-world-g…
Human population through time
(American museum of natural history graphic video, 6 minutes, forecast at end)
https://youtu.be/vJ5p3pZlBi4?feature=shared
"In hindsight, that panic was bizarrely overblown" - we may say the same thing about low birth rate panics. Hard to know if low birth rates comes from decades of governments disincentivising having kids (which could be fixed), or if it just that people genuinely don't want kids.
Look at NZ for example. Unlike in the old days where everyone got family support, now you need to earn less than minimum wage to get anything from WFF. The only support an average family gets is free day care, and if you want to stay at home and look after your own kids you get nothing at all, you can't even share the tax burden!. There is a massive financial disincentive to having kids.
Is it a good thing or a bad thing?...it is both.
It is a positive in terms of better fitting our environment but it is a (big) negative in terms of our financial, economic and social structures...so in the short term it will (decades, if we manage to navigate it) it will cause instability but long term it may save us from ourselves.
Assessment of Oz main city house price +/- over next year
https://www.abc.net.au/news/2024-11-25/house-prices-to-fall-2025-melbou…
As expected, looks like the 10 year bond yield is taking a dive again, more than 25 bps down since a fortnight ago. Hopefully the market realises that the trajectory on inflation progress will be more or less affected by the trump administration and a return to normal requires more rate cuts.
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